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Lenzing provides cushioning for redundancy program
Dec '13
Following several negotiation sessions, the Management Board and Works Council of Lenzing AG agreed on a comprehensive package of social measures designed to cushion the effects of the recently announced cost reduction plan.

A corresponding agreement applying to the production sites in Lenzing (Upper Austria) and Heiligenkreuz (Burgenland) was signed. A binding social plan (redundancy program) will be put into effect, and Lenzing’s existing Labor Foundation (Arbeitsstiftung) will be provided with sufficient funding to mitigate negative social consequences.

The measures will take effect at the beginning of 2014 in conjunction with the reorganization of the Lenzing Group. Lenzing will work intensively to receive additional public subsidies to support the implementation of these measures (i.e. from the Upper Austrian Provincial Government and the European Globalisation Adjustment Fund).

Of the planned 390 job cuts, about 100 employees will likely leave the company within the context of retirement plans. These vacant positions will not be filled. Numerous employees will take advantage of part-time early retirement plans and alternative working time solutions.

A total of 100-150 employees are expected to take advantage of the Lenzing Labor Foundation and professionally reorient themselves and gain new long-term career perspectives on the basis of suitable qualification measures. About 30 employees will be able to be transfered to the new TENCEL plant at the Lenzing site.

For those employees who are not offered continuing employment with the company due to the ongoing company reorganization, Lenzing will strive to reach a termination of their employment contracts by mutual agreement supported by the social plan in order to avoid layoffs. The social plan will apply until the end of the year 2014.

“With this package of measures we have developed an acceptable solution for both sides”, says Lenzing CEO Peter Untersperger. “The required savings of EUR 120 mn annually will be realized as planned. Two-thirds of the cost reduction will be achieved by cutting material and other operating expenses and one-third by lower personnel expenditures. On the one hand, these measures will enable us to effectively cushion the hardship of our employees.

“On the other hand, the number of employees to whom no job can be offered will turn out to be much lower than originally expected. I appreciate that we have succeeded in returning to the tried and tested Lenzing approach of coming together in a spirit of cooperation. By these measures we will jointly work to retain the future competitiveness of the relevant sites”, CEO Untersperger adds.

In addition to the above-mentioned measures, the number of contract workers will be reduced and adjusted according to business activities.

“As a member of the Works Council, one can generally never approve job cuts. However, with the agreed upon social plan we have succeeded in achieving a solution which represents an acceptable compromise from our point of view,” comments Rudolf Baldinger, Chairman of the Lenzing Works Council.


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