October 22, 2015 Rieter expects to achieve cost reduction of CHF 15-20 million by 2017, from measures implemented in 2016 and also lead to new investments in the single digit million Swiss Franc range.
According to Rieter, over the last few years, the spinning industry continued to move to Asia and so, Rieter has made significant investments in China and India by adding production capacities in these countries.
“On top, the appreciation of the Swiss Franc has also contributed to a change in the business environment,” the Switzerland based spinning technologies producer said in a press release.
Earlier in March this year, the company had announced that it intends to streamline production in Winterthur, Switzerland and reduce the amount of purchases in Swiss Francs.
“Both measures are being introduced in response to the changed business environment,” it explained.
The proposed concept for the streamlining of production provides for Rieter to concentrate on the assembly of machinery in Winterthur and thus to discontinue machining and sheet metal operations.
“The corresponding discontinued production will be taken over by other Rieter sites and suppliers, while the remaining production is to be realised in a single building,” Rieter added.
The machinery currently being produced in Winterthur will continue to be assembled and tested as the concept provides for the continued provision of producing machinery of Swiss origin.
The proposed concept entails a workforce reduction of around 150 full time equivalents at the Winterthur site and moreover, there are to be 59 fewer temporary positions.
Rieter plans to minimise the number of potential layoffs through early retirement and fluctuation and also has a social plan in place for potentially laid-off employees.
At the same time, the company also reported a pleasing demand for after-sales services and components, although the market for new machinery is still at low levels.
At the end of September 2015, Rieter had a cumulative order intake of CHF 587.1 million.
“The CHF 68.2 million for orders received by the Components business group in the third quarter is especially pleasing,” it informed.
Rieter further added that the demand dynamics in the After Sales business group too were favourable in the third quarter with order intake amounting to CHF 32.3 million.
The low demand for new machinery in the third quarter resulted in order intake totaling CHF 98.3 million at the Machines & Systems business group.
Rieter also informed that the outlook for 2015 as communicated on July 23, 2015, remains unchanged. (AR)