Dutch dredging and maritime equipment supplier Royal IHC will cut 425 jobs as part of what the company is calling a fine-tuning strategy amid persistently poor market conditions.
The job cuts will take place primarily in The Netherlands and are to include permanent and temporary contracts, mainly in indirect and support positions. The company says under the new strategy it will focus on its knowledge-intensive activities, while increasingly outsourcing production. The company blames the cuts on the ‘extremely turbulent’ economic developments in the markets in which it operates.
“As in 2015, the oil price and increasing international competition in particular have led to a significantly lower order intake in the first nine months of 2016 than anticipated,” IHC said in a statement announcing the job cuts. “IHC has already announced that it expects to remain below the forecast sales budget for the whole of 2016. The associated low level of turnover makes it necessary to drastically cut costs, particularly in support positions within the organisation. In addition, the company’s section-building activities will be further outsourced in order to respond to competition from Eastern Europe and Asia.”
Royal IHC says it expects to emerge from the downsizing process as a smaller and healthier company, and still a leading supplier of maritime equipment.
Royal IHC said under its plan it will maintain its main shipbuilding slipway in Krimpen, Netherlands and hang onto a second slipway in Kinderdijk as a reserve. The company’s Executive Board is also being reduced to two members: CEO Dave Vander Heyde and CFO Arie Vergunst.
The company’s website says it employs about 3,200 people worldwide currently.
The statement from Royal IHC added:
“In the period ahead, IHC will be focusing on boosting its sales activities. In addition, IHC units that are currently thriving, such as Beavers, IQIP and Services, will be given space to maximise their potential for growth. IHC will also invest in consolidating staff expertise and knowledge in order to maintain its leading position in the design, engineering, assembly and commissioning of vessels and equipment. Furthermore, international activities will be significantly expanded. In Brazil, IHC has now developed a solid base for itself in terms of market position and technological innovation. By expanding its international activities, IHC is responding to its customers’ growing preference for more “local for local” design and construction. This will also ensure that existing local market potential is properly exploited.”