Swiss Swedish engineering giant ABB has announced a radical restructuring of its transformers division that will see the loss of 1,300 jobs. ABB described the move as an adaptation to overcapacity and higher costs.
The $240 million, four-year programme includes some $120 million in charges in 2005 with group net income for Q2 expected to be significantly lower than Q1.
The consolidation is expected to run until the end of 2008, closing a small number of plants in high-cost countries and cutting about 10% of the total global workforce.
The business had revenues of approximately $2.5 billion in 2004.
“Overcapacity has been the biggest problem in the transformer industry in recent years, mainly the result of deregulation in the power sector,” said Fred Kindle, ABB president and chief executive. “The situation has been made worse, however, by the unprecedented increase in raw material prices we’ve seen since 2004,” he added.