Volkswagen has announced it is not selling its MAN Energy Solutions business, whose portfolio gas and steam turbines, compressors, two- and four-stroke engines for marine and stationary applications, and turbochargers among others.
MAN Energy Solutions, however, will take several measures to restructure its operations, such as halting steam turbine production in its Hamburg, Germany location and make several staff reductions at its sites in Europe and beyond.
“Volkswagen has called on both the management and employees of MAN Energy Solutions to come up with a concept that will make it possible for the company to position itself for the future and achieve financial independence,” said Uwe Lauber, CEO of MAN Energy Solutions. “The paper (which outlines the restructuring plan) lays the foundation for this concept. Volkswagen is now giving us the opportunity to implement the agreed-upon measures as part of the group.”
There has been long-running media speculation that several potential suitors have looked at acquiring MAN Energy Solutions including Cummins, Mitsubishi Heavy Industries and INNIO.
The paper states: “The Volkswagen Group supports the agreements outlined in the paper, expecting that the necessary prerequisites for implementation will be successfully finalized by the end of 2020. Once this has happened, Volkswagen will suspend its plans to sell MAN Energy Solutions until the finalization of the restructuring efforts, which include job cuts, reduction of personnel cost and the relocation of products to foreign production centers. This will apply at least until the end of 2024. The Volkswagen Group has further agreed that the company will remain part of the group until at least the end of 2026 if it achieves a profitability target of 9% EBIT on a consistent basis by that date.”
As part of the restructuring, MAN Energy Solutions proposes cutting 2650 jobs, including 1650 in Germany and 950 in other European and non-European countries. Restructuring measures have been agreed upon for the Augsburg and Oberhausen sites in Germany.
The organizations in Denmark, France, England, and Switzerland will also be streamlined. The company said it will reduce the size of its Berlin site, focusing those operations on the production of components. It will also keep its service business in Hamburg intact sans its steam turbine production.
Headquartered in Germany, MAN Energy Solutions employs about 14,000 people at more than 120 sites globally.