HELSINKI, Dec. 8, 2010 (Press Release) -The first major implementation milestone has been reached relating to the operational excellence programme aiming at improving the efficiency and quality of operations and serving Pöyry's clientele in a cost-efficient way.
Pöyry has made decisions to adapt capacity and to improve its operational model to be aligned with the current and future demand in Finland. These measures will lead to an annual operating profit improvement of about EUR 15 million. The majority of the impact will start from the beginning of 2011 onwards and the rest gradually after that. Restructuring costs of EUR 7.5 million will be recorded in the fourth quarter of 2010.
The statutory employee negotiations initiated in October 2010 in Pöyry's Finnish operations resulted in the decision to reduce capacity of the currently active workforce by about 270 persons. In addition, the capacity of the workforce that has been temporarily laid off will be reduced by about 130 persons. The implementation of these reductions will start immediately. Adaptation measures also include pension arrangements, possible relocations, and to a smaller extent also temporary lay-offs to adjust capacity.
Improvement of business support for Finnish operations will continue. In addition to personnel cost the cost-savings relate to facilities and other fixed costs. Including the above mentioned reductions, the current estimate for the total capacity reduction in Finland is 450-500 persons and includes both operative and non-operative personnel. The improved operational model is expected to be implemented by the end of the second quarter of 2011.
The process to consolidate detail engineering services to engineering centres in cost competitive locations was started in 2009. The ramp-up of engineering centres (Finland, Poland, Brazil, China) serving especially larger projects for industrial clients has resulted in the consolidation of the Finnish engineering centre operations in Kouvola. At the same time, the process to consolidate core competence areas that build on Pöyry's strong process know-how and project management capabilities has continued. The organisation in Finland plays a major role in offering clients effective integrated services, combining technology and process know-how with cost-efficient project implementation serving the industrial sector globally.
Office network in Finland has now been clustered under a regional model with wider scope of services and improved cost efficiency benefiting Pöyry's clients in the regions. Regional centres in Vantaa, Tampere, Turku, Oulu, Kuopio and Lappeenranta offer Pöyry's services across sectors. The regional centres will be supported by local offices concentrating on engagements requiring local presence. Finland will continue to constitute one of Pöyry's core markets with strong service capabilities employing around 2000 persons. This change in operational model does not impact Pöyry's external reporting structure.
Heikki Malinen, President and CEO:
"Cutting-edge engineering and project management is Pöyry's strength and future. Our employees are undoubtedly some of the best in the industry. By working as one Pöyry we can offer our customers the same broad scope of services everywhere. We have an excellent track record and current key projects demonstrate our continued strong presence as the market leader in Finland."
The group-wide operational excellence programme will continue during 2011-2012. The programme includes efficiency improvement measures and investing in core processes and competence development.