Osram to invest in LEDs, while cutting a further 4700 staff

Osram will invest in production facilities such as an LED assembly plant in China, while at the same time selling other plants that make products using older lighting technologies.

After parent company Siemens said it will spin off Osram as a separate company, the world’s second-largest lighting manufacturer has revealed details of how it will continue with its corporate reorganization program. As well as investing in the LED side of its business, this program will result in the loss of an additional 4700 Osram jobs by 2014.

Most of the cuts that will be implemented both in Germany and internationally are aimed at production facilities with products at the end of their product life cycle, or the closure of smaller plants with lower sales.

At the same time, Osram says that it is “building up capacities in future-oriented business areas” – which of course includes LEDs. The company plans to invest “a low three-digit million euro figure” over the coming years in its LED assembly plant in the Chinese province of Jiangsu. This plant is in its final completion stage, and its 1700 employees will manufacture products for key segments of the Chinese market and the entire Asia region. In five years’ time, Osram expects this region to account for around half of the global general-lighting market.

In Germany, Osram has plans to turn its Augsburg site into a center of excellence for manufacturing processes of LED-based products, or to expand its production of fluorescent lamps. This year, the company has inaugurated a new halogen production line at its Eichstätt location, and construction of a second line is already underway.

Wolfgang Dehen, CEO of Osram Licht AG, pointed out that the reduction in staff is a natural consequence of switching to newer lighting technologies, particularly LEDs. “Compared to traditional products, the depth of our added value in LED-based products will be significantly reduced. Consequently, the personnel increase in the future fields will only partially compensate for the change in the traditional business,” he said.

Osram’s reorganization has already resulted in the loss of 1900 jobs worldwide in fiscal 2012, of which 300 were in German locations. Further structural adjustments will see the reduction of an additional 4700 jobs by 2014, mostly achieved through plant sales. In Germany, in addition to the loss of 1000 jobs announced in January, a further 400 jobs will be affected, primarily related to the sites in Berlin, Wipperfürth and Munich. The entire program should result in cumulative gross savings of about EUR 1 billion by 2015.

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