Over the last few years, the world spinning industry continued moving to Asia. As a result, Rieter has made significant investments in China and India, adding production capacities in the two countries. On top, the appreciation of the Swiss franc has also contributed to a change in the business environment.
In March last, Rieter announced that it intends to streamline production in Winterthur (Switzerland) and reduce the amount of purchases in Swiss francs. Both measures are being introduced in response to the changed business environment.
The proposal for streamlining of production makes it necessary for Rieter to concentrate on the assembly of machinery in Winterthur and thus to discontinue machining and sheet metal operations there. The corresponding discontinued production is to be taken over by other Rieter sites and suppliers, while the remaining production is to be realized in a single building.
The machinery currently being produced in Winterthur should continue to be assembled and tested there. The concept provides for the continued provision of machinery of Swiss origin. With the implementation of the two measures, a cost reduction of CHF 15-20 million should be achieved as of 2017.
In addition, Rieter has started to develop a concept for future land use at the Winterthur site.
The proposed concept entails a workforce reduction of around 150 full time equivalents at Winterthur. Rieter plans to minimize the number of potential lay-offs through early retirement.
At the end of September 2015, Rieter posted cumulative order intake of CHF 587.1 million.
The CHF 68.2 million for orders received by the components business group in the third quarter is especially exciting. Also, the demand dynamics in the After Sales business group were favorable in the third quarter with order intake amounting to CHF 32.3 million.
The low demand for new machinery in the third quarter resulted in order intake totalling CHF 98.3 million at the Machines & Systems business group. Rieter will respond to the resulting lower utilization of the production capacity at the Winterthur site. Appropriate temporary working time adaptation measures are being planned.
The outlook for 2015 remains unchanged, assert group sources.