Leoni Restructuring Plan Targets Cost Cuts and Operational Stability
Leoni AG has announced a major restructuring plan to address operational challenges and stabilize its business. The company cited weak market conditions and ongoing issues at its Merida, Mexico plant as key drivers behind the decision.
Leoni restructuring plan addresses Mexico plant challenges
The Leoni restructuring plan focuses heavily on fixing performance issues at its Wiring Systems Division (WSD), especially in Merida. The plant, which opened two years ago, has faced ongoing ramp-up problems. As a result, high personnel and freight costs have reduced earnings by approximately €50 million.
In addition, other WSD facilities in Hermosillo and Durango have not met performance expectations. However, the Merida site remains the primary source of losses.
Learn more about Leoni: https://www.leoni.com
Workforce Reductions and Cost Controls
To improve financial stability, Leoni will implement several cost-cutting measures. The Leoni restructuring plan includes reducing up to 2,000 indirect jobs worldwide, particularly in high-wage countries.
Furthermore, the company has introduced:
- AÂ global hiring freeze
- A salary freeze for non-tariff employees and managers
- Stricter cost discipline across all divisions
These actions aim to quickly improve cash flow and profitability.
Leadership Changes and Strategic Focus
At the same time, Leoni has made key leadership changes. CFO Karl Gadesmann has resigned, and CEO Aldo Kamper will assume his responsibilities on an interim basis.
Additionally, Martin Stüttem will take over as COO of the Wiring Systems Division. The company has also adjusted leadership roles at the Merida plant to strengthen on-site management.
Market Pressures and Global Challenges
Leoni continues to face challenging market conditions, especially in China, where several OEMs have reduced order volumes. Therefore, the company must act quickly to remain competitive.
In response, Leoni has deployed a dedicated expert team to oversee critical project ramp-ups and improve operational performance.
Long-Term Strategy and VALUE 21 Program
Looking ahead, the Leoni restructuring plan supports a broader transformation strategy. The company aims to become a systems provider focused on high-integration technologies and profitable markets.
Leoni will also restructure into a lean financial holding company, with two divisions operating independently and taking full cost responsibility.
Through its VALUE 21 program, Leoni expects to achieve approximately €500 million in annual savings by 2022. However, restructuring costs could reach €120 million, with most expenses occurring in 2019 and 2020.
