Second quarter drop at Grammer

The first quarter had seen sales remain steady as forecast but orders for offroad seats fell steeply since April. Despite this, group revenue for the first half of the year is set to meet target, said the company.

One of Grammer's largest facilities, Haselmühl, in Amberg, Germany, was particularly affected. The site specialises in manufacturing and sales of offroad seats for tractors, forklifts and construction machinery. In 2008, this location generated revenue of nearly €200 million (US$291 million). But sales are forecast to drop to €100 million ($146 million) in 2009.

"We have to be prepared to face substantially lower volumes in Haselmühl in the coming years as well. The only economically viable alternative is therefore to structurally adapt the Haselmühl location for a return to profitability even at revenue levels of €100 million," said Rolf-Dieter Kempis, Grammer CEO.

The company has put together a set of cutting measures, to include introducing a lean manufacturing system and the readjustment of production and non-production areas to €100 million revenue levels.

"In the short-term, we will be able to largely offset the effects of the order decline through an expansion of short-time work. This means that, as of now, no further layoffs are planned for 2009. Over the medium to long term, however, comprehensive structural adjustments will be absolutely necessary to ensure the ongoing existence of the Haselmühl location," explained Hartmut Müller, executive board member in charge of the Seating Systems Division.

"We are convinced," added Müller, "that this reorientation will quickly return the location to profitability, and that Haselmühl will be restored to its position as a driver of profit and growth for Grammer Group over the medium to long term."