Osram pushing forward with corporate reorganization

Osram expanding parts of its corporate program
Total cost savings of about 1 billion euros expected by 2015

Given the accelerated transformation of the lighting market to semiconductor based products, Osram is pushing forward the entered path of its corporate reorganization. The company had already initiated a comprehensive corporate program in early 2012, which in principle focuses on processes and structures, operational activities as well as the further development of the corporate culture. In addition to the previously announced measures, the company has now decided on further structural adjustments. The corresponding reduction of an additional 4,700 jobs by 2014 will mostly be achieved through plant sales. At the same time, staff will be increased in future-oriented business fields, which will partly compensate the adjustments in the traditional business. The measures of the entire program are to result in cumulative gross savings of about 1 billion euros by 2015. The total costs in the period until 2014 amount to a mid-three digit million figure.

Due to the fundamental change in the lighting sector, Osram had already announced in January 2012 that it would adjust its capacities and in doing so adjust its workforce both nationally and internationally by the end of fiscal 2014. In implementing these measures some 1,900 jobs have already been reduced worldwide in fiscal 2012, of which 300 were in German locations.

With the newly defined measures the number of employees will be reduced further by 2014, particularly outside of Germany. Based on current plans – in addition to the 1,000 jobs already communicated in January – a further 400 jobs will be affected in Germany primarily related to the sites in Berlin, Wipperfürth and Munich. The measures in Germany and internationally are aimed at plants with products at the end of their product life cycle or the closure of smaller plants with lower sales. At the same time, Osram is aiming to restore profitability with efficient structures in production, research & development, sales as well as in central functions.

“We are consequently treading the path of corporate reorganization and in doing so are entering the digital lighting age. Compared to traditional products, the depth of our added value in LED-based products will be significantly reduced. Consequently, the personnel increase in the future fields will only partially compensate for the change in the traditional business,” said Wolfgang Dehen, CEO of OSRAM Licht AG.

Osram is building up capacities in future-oriented business areas. As such the company created 200 jobs in the past fiscal year in Germany alone. During the course of the year, the company also inaugurated a new halogen production line at its Eichstätt location with construction of a second line already underway. Osram also jointly developed a future concept with employee representatives at its Augsburg site. Key aspects of this concept are the development of the location into a center of excellence for manufacturing processes of LED-based products or the expansion of the fluorescent lamp production. Osram will invest a low three-digit million euro figure over the coming years in its LED assembly plant in the Chinese province of Jiangsu. In the final completion stage, 1,700 employees will manufacture products for key segments of the Chinese market and entire Asian region. The region will already account for around half of the global general lighting market in five years’ time.

A current, detailed study on the lighting sector by McKinsey estimates the total market to grow by roughly 5 percent per year between 2011 and 2016. The market volume for LED is expected to rise to 37 billion euros by 2016 from 9 billion euros last year. In the same time period the market volume of traditional products will decrease by 15 percent, according to the forecast.