Kennametal, a supplier of tooling and industrial materials based in Latrobe, Pennsylvania, announced yesterday that it has agreed to downsize its Essen, Germany facility instead of closing it as previously proposed, following negotiations with local employee representatives.
Kennametal said that the facility will be significantly smaller with lower operating costs and that a significant reduction in labor will occur as the company moves products to other lower-cost Kennametal facilities. The agreement between Kennametal and the Essen employee representatives is effective through June 30, 2022.
“Our decision to maintain a much smaller presence in Essen was the result of a compelling proposal offered by the local employee representatives,” Kennametal President and CEO Christopher Rossi said. “The facility will be more competitive globally with improved productivity from increased work hours, lower costs and a smaller but more profitable product portfolio. We recognize the effect these changes will have on our employees, and we will continue to work closely with their representatives to assist them.”
The company expects to deliver its FY21 Restructuring Actions with the original estimated annualized savings of $25 to $30 million but with lower estimated pre-tax charges of approximately $55 to $65 million, a decrease from $60 to $75 million.
Kennametal is also considering the acceleration of other facility closures as part of the restructuring activities.
The company recently completed several closures as part of its previously announced FY20 Restructuring Actions, which are expected to result in annualized savings of $35 to $40 million with pre-tax-charges of $55 to $65 million.
Kennametal recently closed its manufacturing facilities in Lichtenau, Germany, and Irwin, Pa., and consolidated its operations into other lower-cost, modernized Kennametal facilities. The company also completed negotiations with the employee representatives of the Neunkirchen, Germany distribution center, and transitioned distribution activities to a third-party logistics provider.