Vapo begins staff reduction consultations for all Finland operations as it looks to recover from €30M operating loss in 2011
January 5, 2012
– The operating loss of the Vapo Group for 2011 is estimated to be around EUR 30 million. To safeguard the long-term future of the company, the Vapo Group launched an efficiency-enhancement programme at the start of December, designed to achieve annual cost savings of more than EUR 10 million and a clear and permanent improvement in cash flow by cutting investments and improving capital efficiency.
In addition to the efficiency-enhancement already announced, the company is launching consultations under the Act on Co-operation within Undertakings to reduce staff overheads due to financial and productive reasons. The consultations affect all the activities in Finland of the Vapo Group, which employ a total of around 800 persons. Consultations will be conducted in Vapo Group administration and in all business areas. The aim of the procedure is to identify savings equivalent to around 90 person work years of wage costs. Consultations will begin next week and are estimated to last around six weeks.
According to CEO Tomi Yli-Kyyny, the company has so far been able to avoid staff reduction measures. However, changes in the operating environment and the company’s impaired financial performance have meant that in order to improve competitiveness and profitability it is essential to deploy all possible savings measures. In this situation it is also necessary to reduce staff costs.
According to Yli-Kyyny, the company aims to use various means to keep down direct employee reductions. “During the coming weeks we will be examining ways to increase efficiency by lowering the levels of the organization simplifying operating models and clarifying responsibilities. These measures will, however, inevitably also lead to staff reductions, but, as well as relocating staff, we will try to minimize the inconvenience to employees threatened with redundancy by organizing job seeker training and guidance in retraining. In addition to the statutory severance payment, we are also prepared to offer employees threatened with redundancy voluntary support packages equivalent to 2-4 months’ pay to alleviate the situation of employees losing their job in this difficult transition. The amount of additional compensation will depend on the length of employment in the Vapo Group”, Yli-Kyyny says.
“We are also encouraging all employees to convert this year’s holiday pay into time off, so that we can minimize the number of jobs shed. To this end, senior management is foregoing this year’s holiday pay gratuitously”, Yli-Kyyny says.