Calsonic Kansei Europe has been given 12 months to make the heat exchanger business profitable or face closure.
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Employees have been told one-in-10 of the 600-strong workforce at Llanelli, West Wales, will be encouraged to take voluntary redundancy, there will be no pay rise for 12 months and productivity must improve.
President and COO of Calsonic Kansei Europe, Dave Pallas, told workers there are three important elements to the “survival plan” agreed with Japanese bosses of the Calsonic Kansei Corporation.
The Llanelli site incorporates the European head office, the European technology centre and its largest manufacturing site in Europe.
Loss making products will be eliminated and production standardised, efficiency improved with additional output and 60 jobs will go while those who remain will not be paid more for extra work.
In a statement, Pallas said: “The management team takes no pleasure from the implementation of such severe measures, but we are in a “survival” situation here in Llanelli and we are absolutely determined to recover from the situation we are in today.
“This is a particularly difficult time for our employees, some of whom have been asked to accept a salary freeze and effectively work harder to support our company survival plan.”
There is virtually no prospect of financial aid from the Welsh Assembly (regional government) or the Welsh Development Agency, which is by European law restricted to giving management advice only and cannot prop up struggling companies.
The survival plan comes three months after Calsonic Kansei said it would transfer its European headquarters to Paris within two years and relocate some jobs.
The company’s European group is headed up by three sites in the UK.
The site in Llanelli includes the technology centre and is also the site for the heat exchange division’s “mother plant”. Radiators contribute over half of the company’s business.
Cockpit modules are made in County Durham in north-east England to supply Nissan’s nearby Sunderland plant, and this is the “mother plant” for cockpit modules and climate systems manufacturing.
The third site in Washington, also close to Nissan, is the engine & exhaust modules division “mother plant”. This site also houses the technology centre for exhaust products
In addition to these “mother plants” there are further manufacturing sites in Sunderland (NE England), the Netherlands, France, Spain, Poland and South Africa and customer support offices in Paris and Munich.
Altogether, around 2,000 people are employed, with annual sales of €366 million.
Latest published statements by the parent company show income is down a quarter over 12 months ago and warn that intense competition and higher material costs are affecting operations.
It also says observers can expect rationalisation of operations this year.
