Job cuts at Symrise to up competitiveness
group Symrise as the equity fund-owned firm says nearly 600 jobs
will go by the end of 2006.
Under the latest set of decisions from the board at Symrise to improve competitiveness, 580 jobs will go, with around 350 of these in Germany. Employees across the firm will work a 40 hour week replacing the current 37.5 hour week, without wage increases and a salary freeze for the next two years.
On the production side, the firm, a recent merger between the German flavour and fragrance houses Dragoco and Haarman & Reimer owned by Northern Europe Private Equity Fonds (EQT), will expand its fragrance and flavours production in Holzminden and consolidate production of natural flavouring substances on site while retaining production in Nördlingen.
The highly competitive flavour industry, valued at €4.5bn in 2001 by IAL Consultants, is driven by the top ten industry leaders that dominate 65 per cent of the total market. Swiss firm Givaudan tops the stakes with about €1.8bn worth of sales and 13.5 per cent market share, in fourth position Symrise takes about 9 per cent.
Jim Forman, CEO of Symrise recently told FoodNavigator.com that a key issue impacting flavour firms - as with other food ingredient and additive suppliers - is ongoing mergers and acquisitions of their customers.
"The main issue is consolidation in our customer database that gives them leverage in buying power. Increasing price pressures mean we need to be cost effective," he said.
"The average industry growth rate is in the region of 2 to 3 per cent, at 1.5 per cent we were below this last year," commented Forman in June.
Symrise said this week that the German Lower Saxony government 'will provide subsidies related to the company's planned investments of up to €46 million in the coming three years'.
Forman, whose background is in finance, denied these claims believing that the privately-owned EQT are not 'financial engineers' and suggested that because they are looking for value through cost synergies and top line growth their time frame will be longer.
In September 2002 the European Commission cleared the EQT purchase of Holzminden-based H&R and Bayer-owned Dragoco. The combined company has 5600 employees at some 300 production facilities. At the time the Commission said that EQT's strategy is to invest in medium-sized companies in order to generate returns for its investors. "It intends to combine H&R and Dragoco to subsequently list the merged entity on the stock exchange," said the Brussels body.
