Voith Paper "Gearing up" for Changes in Global Paper Markets

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Voith Paper, Heidenheim, Germany, reports that it is "gearing up" for structural changes in its markets. These changes, the company noted, are being necessitated by the accelerated decline of graphic paper machines due to increasing digitalization and the rise of a new market segment for medium-size board and packaging machines (especially in Asia).

Voith points out that the ongoing digitalization of everyday life through tablets like the iPad and the ensuing changes in consumer behavior is faster than expected, having a negative impact on the demand for so-called graphic papers. As a result, it has experienced a noticeable slowdown in business this fiscal year and a deterioration of its medium to long-term perspectives for graphic paper machines.

However, Voith added, the demand for paper machines will continue to grow in the medium and long term, especially in Asia. But these countries are increasingly asking for medium-size plants, particularly for board and packaging papers, which are less investment-intensive.

"In this newly arising segment, Voith has to fight for a market share against stiff competition from local suppliers. Due to the ensuing cost pressure, these machines are already largely produced locally. The fast-growing demand in this new segment therefore results in a lower share in value creation and sales in and from Europe," Voith explained.

The company said it is adapting to these developments with a comprehensive catalogue of measures. The German and Austrian Voith Paper locations, which mainly develop, design, and produce large plants with high investment costs, are particularly affected by the market changes and are to be streamlined. Wherever it appears feasible to amalgamate and pool production and engineering capacities from several locations, to adapt the resources in the German-speaking area to the new market situation.

In the course of this reorganization, personnel measures will be inevitable, Voith continued. "It is envisaged to cut a total of about 710 jobs in Germany and Austria in all areas—in the administration and also in the production departments. The intended staff reductions will hit the Voith Paper locations at Heidenheim (about 280 jobs), Ravensburg (about 300 jobs), Krefeld (about 55 jobs), and St. Pölten (about 70 jobs).

Wherever feasible, the affected employees will be offered alternative jobs within the company. Beyond that, social options such as early retirement or transfer companies are to be used.

Dr. Hans-Peter Sollinger, CEO of Voith Paper, said that "the paper market will continue to be an attractive market for Voith with good growth perspectives, which we will utilize in a profitable way. At the same time, the market conditions are about to undergo a radical change. Worldwide, graphic papers experienced an irreversible decline in demand, while other areas, such as board and packaging or tissue papers, are significantly growing. We are able to utilize the solid position of our company to actively adapt to these developments. With the planned measures that have just been introduced, we will secure our leading position as a partner in the paper industry, as well as retain our competitiveness and profitability in a changing market environment."