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Challenging conditions deter Lenzing from expanding
01
Dec '14
Austria based, Lenzing said looking at the challenging conditions, it will not undertake any new expansion projects at any of its viscose staple fibre (VSF) production sites across the world.

Although Lenzing continues to anticipate good volume demand for all man-made cellulose fibres, it has been hit by the gradual decline in global VSF prices since the past many months.

To counteract difficult market conditions in the global fibre industry, Lenzing initiated a cost optimization program at the beginning of 2014.

“Even though, the results achieved up until now are encouraging, but by far insufficient to offset the decline in VSF selling prices on the international marketplace,” the VSF producer said.

Lenzing continues to anticipate good volume demand for all man-made cellulose fibres. However, it does not expect fibre selling prices to recover in upcoming quarters.

It attributes this development to the substantial decline in polyester fibre prices as a result of the massive oil price decrease, and also lowering of raw cotton prices, again since the last few months.

For these reasons, Lenzing will not implement any major new projects at the Austrian site or abroad to expand its VSF capacities in the foreseeable future.

Lenzing said, the investment volume of the company will be adjusted to reflect the current market situation and will be significantly reduced in the subsequent years.

“This should contribute to improving the supply situation in the global VSF market, which it would like to sustainably profit from in its role as one of the world’s largest producers,” it added.

Having started the new Tencel fibre plant in Austria and the reduced investment volume, Lenzing is unable to maintain technical planning and production capacities at current levels.

“This necessitates a reorganization of Lenzing’s internal engineering and maintenance business areas and its subsidiary Lenzing Technik GmbH,” it stated in a statement.

The restructuring measures are expected to impact up to 250 jobs, including one-third temporary staff, mainly at the Lenzing Austrian site.

The distribution of the job cuts among the various sites will be determined by the beginning of 2015 within the context of a project which is already under way.

In this connection, Lenzing said, it will try to avoid layoffs and strive to reach a mutually acceptable solution with the affected employees as it succeeded in doing within the context of the first cost optimization program.

During initial talks on this issue held with the Lenzing Works Council, Lenzing agreed to extend the current redundancy program and offer the possibility for employees newly affected by the downsizing to transfer to the Lenzing Labor Foundation.

At the same time, Lenzing is working on a strategic reorientation of its subsidiary Lenzing Technik GmbH to enable it to focus more strongly on the external market in the future. (AR)

Fibre2fashion News Desk - India

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