Machine builder Sumitomo (SHI) Demag has announced plans to reduce staff and make structural changes in production at its German sites.
The Oct. 14 announcement blamed weakening demand, which the company said is down 50 percent in 2024.
Plastics processors in the automotive, electronics and construction industries haven't been investing in their machine fleets, according to CEO Christian Maget.
"In the medium term, a revival of investment activity in these sectors is not expected. The slumps being experienced have been exacerbated by market conditions beyond our control. Like these industries, we must prioritize how we adapt and adjust our core competencies and production capacities to best support our customers and these wider industry transformations," Maget said in a news release.
Sumitomo has a global production network with sites Japan and China in addition to Germany, putting it in a strong position to cut costs and become more efficient, Maget also said.
"These decisions we are taking today are in order to ensure our future in Germany and optimize production efficiency across the entire production process," Maget added.
Sumitomo management had made a solidarity pact with its workers council at the two German sites in Wiehe and Schwaig in 2020. The agreement led to a voluntary waiver of bonuses by the entire management team and all non-pay-scale employees as well as the introduction of temporary short-time working for all employees.
The pact helped the company retain its workforce and adjust overall capacity to increase immediately when demand called for it.
However, conditions remained challenging with international conflicts and key markets struggling, particularly automotive, electronics and construction.
"After four years of market crisis and the disappearance of important markets such as Russia, our strong increase in market share and our positioning as market leader for fully electric machines are no longer sufficient to compensate for this market crisis," Chief Sales Officer Anatol Sattel said.
"We do not see any current market recovery in the mentioned sectors either this or next year. Since the market crisis in the injection molding machine sector is not limited to Germany, but affects large parts of Europe, the USA and China, we can no longer compensate through our international business," Sattel said.
Machine builders are struggling in Germany, where orders for plastics and rubber machinery haven't yet "bottomed out," according to the mechanical engineering industry association VDMA.