The restructuring events database contains factsheets with data on large-scale restructuring events reported in the principal national media and company websites in each EU Member State. This database was created in 2002.
Manufacturing Manufacture Of Rubber And Plastic Products And Other Non-Metallic Mineral Products Manufacture Of Rubber And Plastic Products 22 - Manufacture of rubber and plastic products
European Globalisation Fund (EGF)
Year: 2007, Case number: 4
New offshoring locations
Not Available
1,132 jobs Number of planned job losses
Announcement Date
15 January 2007
Employment effect (start)
Foreseen end date
31 August 2007
Description
On 15 January 2007, mobile telephone cover manufacturer Perlos announced that it was going to stop production in Finland. Following personnel negotiations, a total of 1,104 workers are to be laid off. In addition 28 jobs will be cut through a pension arrangement. Negotiations with staff applied to about 1,400 employees. Only 200 workers will remain in Perlos – 100 in technical support and marketing in Joensuu, the rest in the offices in Turku and Ylöjärvi, and the head office in Vantaa. The focus of the job cuts will be in North Karelia, where the company’s production focuses on two factories in Joensuu and Kontiolahti. Of the 1,400 people affected by the job-cutting plans, 1,243 were in North Karelia.
To oppose the planned job cuts, the entire staff of the Perlos factories in Joensuu and Kontiolahti walked off their jobs at noon on 16 January. Shop stewards representing factory workers and office personnel said that all employees at the facilities took part in the action. In addition to North Karelia, Perlos has operations in three other locations in Finland: a head office in Vantaa, a product development centre in Turku, as well as research and development operations in Ylöjärvi. The downsizing plans will affect 89 employees in Vantaa, 15 in Turku, and 53 in Ylöjärvi.
"Demand for Perlos' services in Finland has continued to shrink, and there are no preconditions to continue production operations in the present form", was the reason given by Perlos for the move. Last year manufacturing operations in Finland constituted nearly 30% of the turnover of the company’s constant business. In addition to Finland, Perlos is planning to reduce its worldwide workforce of about 13,000 employees by 4,000.
Perlos has three factories in China - two in Beijing and one in Guangzhou. In addition, it manufactures injection moulds in Shenzhen. Perlos is currently building a new plant in Guangzhou, as well as a new factory in Chennai, in India. At the end of 2006 it employed a total of 7,612 people in Asia. In Europe, there are operations in Finland, as well as Komarom in Hungary and a product planning centre in the Swedish city of Lund. At the end of 2006, the company's European personnel numbered 4,207, including those in Finland. In the Western hemisphere, Perlos has factories in Reynosa, Mexico, and Manaus, Brazil, employing 1,123 people by the end of 2006. Perlos gave out advance information of its third quarter result on 15 January 2007. The figures showed that turnover in October through December had fallen to 144 million Euro from 200 million Euro the previous year. The company's Board of Directors said that it had decided on its profitability improvement programme. The aim is to achieve greater efficiency in operations and reduce annual expenses by more than 100 million Euro by the end of 2007. In addition to personnel cuts, the company is trying to reduce costs through greater efficiency in production processes, purchasing and subcontracting. According to Perlos CEO Matti Virtanen, an aim of the profitability improvement programme is to fundamentally renew the company’s operating procedures.
"Perlos has a healthy and competitive core business, but its cost structure does not correspond to the current level of net sales. I am convinced that with this process of change, our financial performance will improve and we will simultaneously improve our competitiveness in order to become better and quicker at responding to our customers' changing needs", Virtanen says. Minister of Trade and Industry Mauri Pekkarinen said on 15 January that the decision by Perlos to end manufacture in Finland was a serious blow, especially to North Karelia. He noted that the move is an example of how producers of components tend to move more quickly than before to where their main customers are located, no matter how much Finnish authorities try to improve the conditions of their operations at home. He said that already on Monday he gave instructions for the compiling of a crisis group in North Karelia.
At the national level a structural change working group already exists, which helped deal with the aftermath of the closure of the UPM Voikkaa paper mill last year. Pekkarinen said that the government's ministerial committee on economic policy will be given a report on the situation in North Karelia, and an initial assessment of measures that need to be taken. Minister of Finance Eero Heinäluoma (SDP) and Minister of Labour Tarja Filatov (SDP) promised that all possible aid would be provided for the areas most heavily affected by the Perlos shutdown - mainly Joensuu and Kontiolahti. Heinäluoma said that the Joensuu area should be named a zone of sudden structural change in order to secure sufficient state support. Filatov said that money had been set aside for investments in areas of structural change affected by bad news. She promised that money earmarked for training in cases of big changes will be made available in the affected areas. Filatov said that she was surprised that Perlos is shutting down nearly all of its production at one go. "Many other companies would have sought to shift production in phases so that people and regions would have had better possibilities to adapt", she says. According to Filatov, the Ministry of Labour will now ascertain if some other company might continue the same production in the area. At the same time labour officials will study what kinds of refresher courses the Perlos employees might need to find work in other companies in the area.
The Ministry of Labour also plans to find out if it might be possible to create new jobs with the help of investment aid to other companies operating in North Karelia. On 6 February 2006 Perlos started codetermination negotiations in order to cut 600 jobs in Finland. The job cuts were attributed to the decision to reduce production in Finland and increase manufacturing in low-cost production countries close to emerging markets in Asia, Central Europe and the Americas. As a result of the negotiations, which were completed on 6 April 2006, Perlos announced the loss of 573 jobs. This took place gradually during the following 12 months. The factory in Nurmijärvi is to be closed. The factories in Joensuu, Lehmonharju and Kontiolahti continued their operation. Perlos decided to close down the factory in Ylöjärvi already in June 2005. All the 579 employees were dismissed. This meant that Perlos had announced the dismissal of over 1,100 employees in one year.
Eurofound (2007), Perlos, Offshoring/Delocalisation in Finland, factsheet number 64792, European Restructuring Monitor. Dublin, https://restructuringeventsprod.azurewebsites.net/restructuring-events/detail/64792.
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