Perlos plans to shut down manufacturing in Finland - 1,200 jobs to go

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Mobile telephone cover manufacturer Perlos plans to end manufacturing operations in Finland. Consequently, the company will initiate co-determination negotiations with staff applying to about 1,400 employees.
      Announcing its "profitability improvement programme" on Monday, the company said that it needs to reduce its personnel in Finland by 1,200.
      The focus of the job cuts will be in North Karelia, where the company’s production focuses on two factories in Joensuu and Kontiolahti. Of the 1,400 people affected by the job-cutting talks, 1,243 are in North Karelia.
      To protest the planned job cuts, the entire staff of the Perlos factories in Joensuu and Kontiolahti walked off their jobs at noon on Tuesday. Shop stewards representing factory workers and office personnel said that all employees at the facilities took part in the action.
     
In addition to North Karelia, Perlos has operations in three other locations in Finland: a head office in Vantaa, a product development centre in Turku, as well as research and development operations in Yöläjärvi.
      The downsizing talks will affect 89 employees in Vantaa, 15 in Turku, and 53 in Yöläjärvi.
      "Demand for Perlos’ services in Finland has continued to shrink, and there are no preconditions to continue production operations in the present form." was the reason given by Perlos for the move.
      Last year manufacturing operations in Finland constituted nearly 30 per cent of the turnover of the company’s constant business.
     
In addition to Finland, Perlos plans to cut back on personnel at other factories as well. According to Monday’s announcement, the company is planning to reduce its worldwide work force of about 13,000 employees by 4,000.
      Perlos has three factories in China - two in Beijing and one in Guangzhou. In addition, it manufactures injection moulds in Shenzhen.
      Perlos is currently building a new plant in Guangzhou, as well as a new factory in Chennai, in India. At the end of 2006 it employed a total of 7,612 people in Asia.
      In Europe, there are operations in Finland, as well as Komarom in Hungary, and a product planning centre in the Swedish city of Lund.
      At the end of 2006, the company’s European personnel numbered 4,207, including those in Finland. In the Western hemisphere, Perlos has factories in Reynosa, Mexico, and Manaus, Brazil. At the end of 2006, it employed 1,123 people in North and South America.
     
Perlos gave out advance information of its third quarter result on Monday. The figures showed that turnover in October through December had fallen to EUR 144 million from EUR 200 million the previous year. According to preliminary information, operating profit of continuing operations exclusive of non-recurring items in 2006 was EUR 11-12 million (EUR 21.2 million in 2005). Operating loss totalled EUR 32-33 million and the last quarter operating loss was EUR 3-4 million.
      The company’s Board of Directors said on Monday that it had decided on its profitability improvement programme, which is aimed at significantly boosting the operating profit of Perlos’ continuing operations exclusive of non-recurring items compared with 2006. The aim is to achieve this through greater efficiency in operations and by reducing annual expenses by more than EUR 100 million by the end of 2007.
      In addition to personnel cuts, the company is trying to reduce costs through greater efficiency in production processes, purchasing and subcontracting, by cutting costs related to quality, and by improving the quality of the company’s operations.
     
According to Perlos CEO Matti Virtanen, an aim of the profitability improvement programme is to fundamentally renew the company’s operating procedures.
      "Perlos has a healthy and competitive core business, but its cost structure does not correspond to the current level of net sales. I am convinced that with this process of change, our financial performance will improve and we will simultaneously improve our competitiveness in order to become better and quicker at responding to our customers’ changing needs", Virtanen says.
     
Minister of Trade and Industry Mauri Pekkarinen (Centre) said on Monday that the decision by Perlos to end manufacture in Finland was a serious blow especially to North Karelia.
      He noted that the move is an example of how producers of components tend to move more quickly than before to where their main customers are located, no matter how much Finnish authorities try to improve the conditions of their operations at home.
      He said that already on Monday he gave instructions for the compiling of a crisis group in North Karelia.
      On the national level a structural change working group already exists, which helped deal with the aftermath of the closure of the UPM Voikkaa paper mill last year.
      Pekkarinen said that the government’s ministerial committee on economic policy will be given a report on the situation in North Karelia, and an initial assessment of measures that need to be taken.
     
Minister of Finance Eero Heinäluoma (SDP) and Minister of Labour Tarja Filatov (SDP) promised that all possible aid would be provided for the areas most heavily affected by the Perlos shutdown - mainly Joensuu and Kontiolahti.
      Heinäluoma said that the Joensuu area should be named a zone of sudden structural change, in order to secure sufficient state support.
      Filatov said that money had been set aside for investments in areas of structural change affected by bad news. She promised that money earmarked for training in cases of big changes will be made available in the affected areas.
     
Filatov said that she was surprised that Perlos is shutting down nearly all of its production at one go. "Many other companies would have sought to shift production in phases so that people and regions would have had better possibilities to adapt", she says.
      According to Filatov, the Ministry of Labour will now ascertain if some other company might continue the same production in the area. At the same time labour officials will study what kinds of refresher courses the Perlos employees might need to find work in other companies in the area.
      The Ministry of Labour also plans to find out if it might be possible to create new jobs with the help of investment aid to other companies operating in North Karelia.


Links:
  Perlos press release: Perlos launches a large-scale profitability improvement programme and releases preliminary information about 2006 results

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