More than 400 jobs to go at Royal IHCCompany News // October 18, 2016
Royal IHC has announced that, as a result of what it called "persistently poor" market conditions, it is fine-tuning its strategy.
"IHC remains as committed as ever to boosting its knowledge-intensive activities, as is already happening in IQIP, mission equipment and services," said the company. "Responding to market demand, activities in The Netherlands will focus on creating added value for customers. Hence, IHC is increasingly outsourcing production activities in order to remain distinctive and cost-efficient in its marketing of ships, equipment and services, with product development and design, as well as sales and marketing remaining within the company." This adjustment in strategic direction will have an impact on around 425 employees in The Netherlands. The management of IHC is talking about this with the works council and trade associations.
"Economic developments in the markets in which IHC operates continue to be extremely turbulent," said the company. "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 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 sectionbuilding activities will be further outsourced in order to respond to competition from Eastern Europe and Asia," said IHC, which will maintain the shipbuilding slipway in Krimpen as its main slipway. The Kinderdijk slipway will be maintained as a reserve. In response to the economic situation and the need for cutbacks, the Executive Board is being reduced to two members: CEO Dave Vander Heyde and CFO Arie Vergunst.
IHC said it expects to emerge from this downsizing process as a smaller and healthier company. "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," the company said. "IHC will also invest in consolidating staff expertise and knowledge in order to maintain its position in the design, engineering, assembly and commissioning of vessels and equipment."
International activity 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.