The Haselmühl plant in the Amberg region, which manufactures off-road seats, has been particularly affected by the global financial crisis

One of Grammer AG's largest plants in Germany may face layoffs and other cost-cutting measures as falling orders in the off-road seats segment threatens the group's financial viability.

The Haselmühl plant in the Amberg region, which manufactures off-road seats for tractors, forklifts and construction machinery, has been particularly affected by the global financial crisis.

In 2008, Haselmühl generated about EUR200 million (USD238.7 million) in revenues. Grammer is now expecting sales to reach about EUR100 million (USD141.8 million) in 2009. Based on the latest sales forecasts of its customers, Grammer says it sees "little hope" of significant recovery over the next few years.

"We have to be prepared to face substantially lower volumes in Haselmühl in the coming years. The only economically viable alternative is to structurally adapt the Haselmühl location for a return to profitability even at revenue levels of EUR 100 million (USD141.8 million)," says CEO Rolf-Dieter Kempis.

During the second quarter of 2009, orders in the off-road segment declined by about 50%. Orders for off-road seats, especially tractors, have fallen steeply since April. Forklift orders are also down in the range of 40%.

The group's cost optimisation measures include the introduction of standardised structures for non-production areas, the implementation of a lean manufacturing system and readjustment of capacities in production and non-production areas to revenue levels of EUR100 million (USD141.8 million).

Since 2008, Grammer has reduced its headcount by nearly 25% or 2,500 people, mainly in locations outside Germany. Hartmurt Müller, the executive board member for seating systems says there will be no further layoffs in 2009 as the company offsets its declining orders with short-term work.

However, layoffs are likely to happen in the medium- to long-term.

"We need to adjust the cost structure of the Grammer Group, especially the Haselmühl location, to a significant lower turnover, in order to reduce the break-even point and be profitable again. This means cost reduction in material, personnel and other expenses." Ralf Hoppe, Grammer's vice president for communications, tells Forkliftaction.com News.

The Haselmühl location covers the production of suspended seats for offroad vehicles and a smaller segment produces passenger seats for trains. Hoppe says the railway segment is not impacted by the cost optimisation measures. The Haselmühl site also includes the IT department and R&D and sales functions for offroad seats.

In 2008, Grammer AG achieved EUR10.007 billion (USD14.198 billion) in revenue, EBIT of EUR32 million (USD45.4 million) and a net profit of EUR14 million (USD19.9 million). As of 31 December 2008, Grammer employed 8,908 people in 17 countries.