Symrise axes jobs to lift top line growth
with the equity fund owned firm warning 500 employees will be axed
from the workforce under a new drive for cost effectiveness,
increased competitiveness and top line growth, reports Lindsey
Partos.
The move comes just months after EQT acquired and merged the German flavour and fragrance houses Dragoco and Haarman & Reimer, claiming a 9 per cent share of the competitive flavours market. Blaming market pressures, EQT will slice away jobs in a bid for cost effectiveness.
"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," Jim Forman, CEO of Symrise tells FoodNavigator.com.
The world market for flavours, 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 €1.8bn worth of sales and 13.5 per cent market share, in fourth position Symrise takes about 9 per cent.
"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.
According to the CEO 'low-value production' will be impacted by the move as the firm looks to shave costs and bring about a 'future-orientated production.' The efficiency drive will also look to procurement and administrative areas.
"We're actually shifting our resources and will invest further in sales and marketing, R&D and innovation," said Forman, adding that 7 per cent is the minimum level of total spending on R&D for the firm.
The job reductions will be confirmed in the early autumn with supplies to customers remaining unaffected, said the CEO of Symrise for which flavours represent a 47 per cent share of total business.
In the medium term, production locations in Germany and North America 'may be moved to lower-wage countries' although the plans are yet to be confirmed.
Industry observers wager that EQT is looking for a 'quick buck' and will soon sell on the flavour and fragrance house for a profit. But 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.
