The household appliance manufacturer Miele has announced drastic cost-cutting measures.

Miele management announced on Tuesday evening that additional annual financial flexibility of 500 million euros should be created by 2026, after the workforce had previously been informed about the measures.

The employees are confronted with severe cuts.

Susanne Preuss

Business correspondent in Hamburg.

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    2,700 jobs worldwide will be lost or affected by relocation.

    That's more than a tenth of the total workforce: Miele recently had around 23,000 jobs.

    “These are serious steps.

    We are aware that this will hit many colleagues hard,” says a letter from Miele management to the workforce.

    In the past four years alone, around 3,000 new jobs have been created, not just to build up additional capacities due to the sharp increase in demand, but also primarily to digitize products, production, and sales and administrative processes.

    Miele expressly emphasizes that staff reductions should be carried out in as socially responsible a manner as possible.

    There should be a severance pay program that encourages voluntary departure.

    Older employees should be offered a partial retirement scheme.

    Positions that become vacant should not be filled again.

    Only if these measures are not sufficient will a social plan be drawn up and redundancies announced for operational reasons, according to Miele.

    The measures have been discussed with the IG Metall union for months.

    Nevertheless, there is sharp criticism from there that staff are being cut instead of investing in quality and product innovations.

    Knut Giesler, district manager of IG Metall in North Rhine-Westphalia, speaks of a “cheaper instead of better strategy” that they will not take part in: “We are calling on the company to negotiate alternatives with us.”

    “Disaster for the people who made Miele great”

    The focus of the planned restructuring is the laundry care division, which was apparently recently in loss.

    The business with washing machines, dryers and washer-dryers for private households is characterized by fierce and strongly price-driven competition and must be put “back on an economically viable basis,” says Mieles.

    To this end, a relocation of parts of production from Gütersloh to the plant in Ksawerów, Poland, is “unavoidable”.

    As a result of this alone, up to 700 jobs in Gütersloh will be gradually eliminated by 2027.

    “The extent of the job cuts in the appliance factory would be a disaster for the people who made Miele great,” comments Bernd Schreiber, head of the works council at the Gütersloh plant, and announces that they will fight to keep as many jobs as possible: “A silent process would be the situation in no way appropriate.” The Polish plant was actually intended to meet increasing demand, people in Gütersloh emphasize.

    However, actual market developments have thrown a spanner in the works.

    Miele achieved 9 percent less sales (across the entire group) last year.

    In terms of the number of units sold, the decline was twice as high.

    Like its competitors, Miele had previously benefited from a special boom during the corona pandemic.

    For 2022, the company reported a sales increase of 12 percent to a record level of 5.4 billion euros.

    This crisis is different than previous ones

    While Miele tended to perform better than the market in previous crises because the premium brand promised lasting value and the high-end customers were not as badly affected, things are different this time, as people in Gütersloh found out.

    There are no signs of an early recovery in sight.

    At the same time, there are significantly higher costs for materials, energy and personnel.

    “What we are currently experiencing is not a temporary dip in the economy, but rather a lasting change in the general conditions that we have to adapt to,” says the information to the workforce.

    Therefore, a cost and efficiency initiative called the “Miele Performance Program” is intended to improve structures, processes and cost positions in all areas.

    The personnel measures should only account for a third of the leeway gained in this way, in the order of half a billion euros annually; the larger part should be realized through increasing sales and a reduction in material and material costs.

    Regardless of this, Miele promises to continue investing in strategically important projects.

    One of the planned investments is a factory in Alabama, where household appliances will be manufactured specifically for American needs.

    Meanwhile, General Works Council Chairwoman Birgit Bäumker is calling for far-reaching job and location security with concrete innovation commitments and future prospects.

    Following the reduction plans for production in Gütersloh, concerns are growing at other production locations.