Over the next three years European aerospace and defense giant will reduce its head count by 5,800 — including up to 1,450 layoffs — as part of a plan to put its defense and space business in line with projected revenues, the company announced Dec. 9.
The plan, presented to the group’s European Works Council, follows a July decision by the EADS board of directors to consolidate its Cassidian,and Astrium units into a single Defense and Space Division (Airbus DS), and to rebrand the company as the “Airbus Group.”
The restructuring will reduce the number of industrial facilities the company currently operates in Germany, France, the U.K. and Spain, and include the cutting of 5,800 positions at Airbus DS and in corporate and headquarters functions through 2016.
“The situation is extremely dramatic,” said Bernhard Gerwert, who has been named chief executive of Airbus DS, which is expected to begin operations in January. Gerwert said EADS must undertake the same measures as those of its U.S. competitors and realign defense activities to account for an expected long-term drop in demand by European governments. “We face huge competition, that is why we have to react now.”
As part of the restructuring, up to 1,500 positions will be offered at Airbus andto accommodate affected employees. Around 1,300 temporary contracts will be allowed to expire without renewal. Along with voluntary departures, layoffs are estimated in the range of 1,000-1,450 employees, depending on the number of voluntary departures.
As part of the overall head count reduction, corporate functions and services will be slimmed down by around 500 positions.
The timing and size of a one-off charge associated with the new plan is being evaluated, the company said.
EADS CEO Tom Enders said despite the changes, the company has no intention of exiting the defense business.
“We have deliberately, consciously decided to stick with our defense business, our space business, but to make it stronger,” he said, adding that the head count reduction is not expected to begin until mid-2014, Enders said. “We need to create operational and market synergies between our product portfolio, and all these measures — including the head count reduction — should give us the competitiveness we need in order to prevail and be successful in the defense and space business tomorrow.”
He said the restructuring plan for the defense and space businesses will result in a substantial consolidation of sites across Germany, France, Spain and the U.K., but that job reductions will hit Germany hardest because it is there that “we have considerably more employees than we have in France or any other country in the new Airbus Defense and Space Division.”
In Germany, the group plans to divest its Cassidian headquarters at Unterschleißheim. Airbus DS will be headquartered in Ottobrunn, with 1,000 jobs currently based in Unterschleißheim relocated there. Another 200-300 Unterschleißheim-based employees will move to other southern Germany-based Airbus DS sites. Airbus employees currently working in Bremen for theIntegrated Fuselage Assembly (IFA), Cargo Hold System (CHS) and further Cabin & Cargo-related activities will be integrated into Airbus DS by late 2014 as part of the simplification of the group’s legal structure.
In France, EADS will divest its corporate office in Paris and its functions will be redeployed to Suresnes, where the company’s Corporate Technical Office and Innovation Works workforce is based. All divisional Suresnes-based activities and staff will transfer to Elancourt or Les Mureaux as part of the future Airbus DS setup and become the “stronghold” of the group’s defense and space activities.
In Spain, Madrid-area activities at San Severo and Castellena will be moved to Getafe, while the transfer of all Barajas-based activities to Getafe is under review. In the Seville area, the group will transfer activities at San Pablo North to San Pablo South. The transfer of Tablada to San Pablo South also is being studied.
In the U.K., EADS seeks to consolidate activities mainly around three major sites — Stevenage, Portsmouth and Newport — to maintain proximity to key customers. Functions at smaller sites will be relocated to one of the three major sites.