Wärtsilä Lays Off 600, Restructures Ship Power Business in Face of "Sluggish" Market

Wärtsilä says the realignment and personnel reduction will save the company €40 million ($43.39 million) a year.

Wärtsilä Corporation (Wärtsilä) Friday announced that as a response to a "sluggish" marine market it will be laying off 600 staff as it looks to restructure its Ship Power business which has been renamed Marine Solutions.

The company, which currently employs 7,217 people globally, says a portion of the job eliminations will be achieved through retirements, and 160 of the eliminated positions will be seen in Finland.

Wärtsilä says the realignment and personnel reduction will save the company €40 million ($43.39 million) a year, and will allow the company to more efficiently "respond to the needs of its various customer segments."

With non-recurring costs associated with the restructuring process estimated at approximately €25 - €30 million ($35.23 - $42.27 million), Wärtsilä says it will begin realising the resulting cost savings at the beginning of the third quarter of 2015, with the full benefit materialised by the end of 2016.

"The marine industry has been slow in recovering from the global economic crisis and new shipbuilding contracting is weak. At the same time, the offshore oil & gas industry has been adversely affected by lower oil prices," said Jaakko Eskola, President, Marine Solutions, Senior Executive Vice President with Wärtsilä.

"In addition, there are risks related to vessel owners negotiating extensions to existing delivery contracts. The combined impact of these developments has created a challenging market situation for the entire marine sector.

"These unfortunate capacity adjustments have to be made in this current environment of low demand in order for us to maintain our competitive position in the global market.

"Despite streamlining the organisation, our commitment to our customers remains absolutely solid," added Eskola.

In April, Wärtsilä reported a robust Q1 despite a "slow marine market."