23 Jul 2024


SKF accelerates its cost-cutting programme

Because of today’s “more challenging business environment”, the bearings-maker SKF has decided to accelerate and expand its cost-cutting programme, first announced in 2010, with the aim of cutting its annual costs by SEK3bn ($464m) by the end of 2015. The new plans will affect around 2,500 people, mainly through early retirement and other voluntary and agreed reductions.

“When we launched our financial targets in the autumn of 2010,” explains SKF’s president and CEO, Tom Johnstone (above), “we identified cost reduction as one of the key initiatives and the activities we have now announced, and those which are underway, are part of this. We will also continue to aggressively drive our initiatives focussed on profitable growth which can be seen, for example, with the new investments we are making in faster-growing regions and industries, our increased investment in research and development, and the acquisitions which we have made.

“Demand weakened as we went through the fourth quarter [of 2012],” he reports, “and we expect it to continue at this lower level at the beginning of this year. Manufacturing was therefore reduced more than planned to reflect this, resulting in inventories being lowered by over SEK600m ($93m).”

SKF’s cost-reduction measures include:
•  consolidating production between sites;
•  transferring production from Western Europe to Eastern Europe, Asia and Latin America to serve these faster-growing markets with more local production;
  consolidating administration and support functions and making them more efficient; and
•  standardising and rationalising its supplier base.

The total cost for the extended programme for the years 2012 to 2015 will be around SEK1.5bn ($232m).