15.05.2017

Cargotec to save €50 million

Hiab, Kalmar and MacGregor owner Cargotec has announced plans to make €50 million of cost savings. It plans to do this by “reducing indirect purchasing spend such as logistics, external services and facilities, streamlining common transactional business support processes and consolidating Finance, HR, Information Management and Indirect Procurement related support services under a planned new Cargotec Business Services operation in Sofia, Bulgaria.”

The annual savings are expected to be fully achieved by 2020 onwards, around two thirds of the savings are due to come from reductions in global indirect purchasing spend like.

The Cargotec Business Services operation is planned to start with businesses in Finland which is likely to result in laying off 60 employees in the country. The employee cooperation negotiations are due to start immediately, with the planned reductions due to be completed within the year.

Vertikal Comment

While this may well make sense, it smells a little bit like the centralisation and consolidation programme that the group began to implement a few years back and then abandoned and reversed, although this time it is purely back office tasks. However its three companies are more than large enough to stand on their own two feet, and while back office tasks should not have any customer impact – all too often it does, as the ‘system’ needs to be fairly rigid to work - this can then result in a sluggishness creeping in as employees end up working for the system, rather than the system serving them.

It need not be this way of course, there is no reason a well-planned consolidated back office operation cannot be as reactive and may well have the resource to justify an even better service. It’s just that all too often the opposite is true. Hopefully this move will not undo all the progress made at Hiab in recent years, as the company is currently ‘on a roll’.