The restructuring of Hydro’s Norwegian extrusion operations is scheduled for completion by the end of the first quarter of 2012 and includes the company's three extrusion plants in Karmøy, Magnor and Raufoss.
Both the press, anodizing line and fabrication activities at Karmøy will gradually be phased out over a period of 15 months.
Operations at the company’s extrusion plants at Magnor and Raufoss will be strengthened
In connection with the phasing out of Karmøy, the entire production and about 40 of the positions will be transferred to Magnor and Raufoss. The restructuring will affect 94 employees at Karmøy. Overall, Hydro’s Norwegian extrusion business has 380 employees.
“We have had a significant decline in sales of profiles to the automotive segment and to the market in the UK. The market trend in these segments has been downward for quite some time.
"We therefore have a significant overcapacity, and even with adjustments and less shift work on all five presses at our three production sites in Norway, this is weakening our cost position over time,” said Trond Sandberg, head of Hydro's extrusion operations in the Nordic countries.
After the changes, Hydro will have sufficient press capacity to continue to consolidate its strong market position in core markets of Norway, Sweden and Finland.
“Karmøy has the highest fixed costs of the three extrusion plants in Norway and was therefore most vulnerable when we have considered a reduction of capacity," said Sandberg.
Hydro expects to take a charge of about NOK50M ($8.3M) in the fourth quarter of 2010 results, equally divided between asset write-downs and redundancy costs.
In 2011, ramp-up costs at Raufoss and Magnor are expected to be in the range of NOK50M ($8.3M). From 2012, it expects costs savings as a result of the more efficient operations and structure.
Hydro's extrusion plant in Karmøy started trial operation in 1969 and was Hydro's first extrusion plant. The plant has a P36-press with production capacity of 15kt/y of profiles, an anodizing line and fabrication unit.
Hydro's extrusion plant at Magnor, near the Swedish border, opened in 1972, has a P16-press and significant fabrication activities. The Raufoss plant was established in 1963 and taken over by Hydro in 1986. The site has a P12, P22 and P65-press, fabrication and anodizing.
The company has about 90 people employed in advanced fabrication in Sweden and painting/fabrication in Finland.