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Hempel Adjusts its European Production Capacity

Published on 2003-10-27. Author : SpecialChem

This is an extract from the Hempel Group President & CEO Ditlev Engel's message to all Hempel employees on 1 October 2003.

The first major change as a consequence of our strategy plan "Beyond Hempel First 2005" we will close down production in Germany and enhance the efficiency of the factories in Spain and Denmark:

The objective of our new strategy plan "Beyond Hempel First 2005" is to ensure that in all respects Hempel will be even stronger in the coming years. And this in spite of the fact that our business has developed reasonable in recent years, a trend we definitely expect to continue in the years to come.

Unfortunately we also have to face that the trend in Europe, especially within the manufacturing maritime industry, has deteriorated markedly, a sad fact which unfortunately has affected and will affect Hempel's earnings in coming years extremely negatively if we do not address this problem as soon as possible.

Thus, the management of Hempel has concluded, on closer consideration, that this downward trend in Europe will not improve in future. We have therefore decided to adjust our European production capacity and cost structure to this fact. This means more specifically that the production in Europe has to be adapted to the actual situation because today we have excess capacity and our costs are too high compared with our competitors.

Thus, it cannot be avoided that we have to say goodbye to a number of competent employees, especially at our factories in Germany, Denmark and Spain. The German factory in Pinneberg, which since 1956 has contributed substantially to Hempel's progress of many years, will be closed by the end of June 2004 and we also find it necessary to cut back on costs and the number of employees in Spain and Denmark now.

Totally we expect that closures, reorganisations and cut-backs will mean that 110 of our employees in Germany, Spain and Denmark will lose their jobs, Germany accounting for most redundancies.

Gradual adaptation:

From own experience I know that closures and changes are very difficult to effect, first of all for the colleagues we have to let go. On the other hand it would be wrong if we do not take action and react before the problems become threatening for Hempel A/S - that would not be "proactive" management.

Thus, my hope is that together we will be able to handle the situation and the considerable challenges facing us in a way that will ensure that our currently high service level will not be affected from the changes which we have to go through.

It is not easy, I know. That is why we have seen to it that the process will be a gradual adaptation.

At the same time as the production capacity disappears, this volume will gradually and partly be transferred to Hempel's existing factories in Portugal, France and Malaysia, since today they are able to produce this at considerably lower costs. At the same time this will mean that we can maintain our delivery service.

I wish and hope that the changes facing us will be implemented in a responsible and appropriate way to all parties since it is our sincere hope that all our competent employees will get a new job as soon as possible.

This is a tough, but at the same time a necessary decision to ensure Hempel's continued progress and I hope that everybody will support this process.

This process will be completed latest by 1 July 2004.

Yours sincerely, Hempel A/S

Ditlev Engel Group President and CEO

Copenhagen, 1 October 2003

Source: Hempel A/S


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