Merck, a global healthcare company based in Darmstadt, Germany, has signed an agreement with employee representatives on an efficiency plan for the company's Germany operations.
The efficiency measures are part of the company's "Fit for 2018" business transformation program spanning all businesses and regions in order to secure Merck's long-term competitiveness. Merck plans to eliminate around 1,100 of the 10,900 positions in Germany by the end of 2015. The positions will be reduced mainly through voluntary-resignation and early retirement programs across all divisions and functions. As part of the agreement concerning the efficiency measures associated with the "Fit for 2018" program, Merck will refrain from forced redundancies until the end of 2017, with the exception of possible site closures and transfers that are still being assessed.
"We have had constructive discussions with Works Council members for the past several months and are happy to say that we now have a roadmap that will position Merck Germany in such a way that the company is prepared for the challenges we will face," said Kai Beckmann, member of the executive board and responsible for human resources, Merck. "This agreement is a positive development for Merck's future and a clear commitment to Germany. Now, we need to consistently implement the measures and continue moving ahead with the changes in our company."
The efficiency measures for Germany comprise more than 100 individual initiatives spanning all businesses and functions. Among others, several support functions across the divisions, such as logistics, will be reorganized. Outsourcing functions to external providers—a measure that had been considered—are not planned. The only exception are activities that are already partially being outsourced to third-party suppliers, such as routine jobs connected to the approval of drugs (Regulatory Affairs), or jobs that require considerable manual labor, such as certain blending and filling activities in production. This will affect around 100 jobs. These outsourcing plans are in line with Merck's strategic approach as set out by the "Fit for 2018" program, which calls for production to be focused on core activities that generate high value.
In the area of financial services, specifically Merck Shared Services Europe GmbH (MSSE), it has been agreed to jointly leverage efficiencies. Merck will refrain from relocating MSSE abroad, a move that had been under review in recent months, at least until the end of 2015. The parties are confident that the defined targets can also be reached at the Darmstadt location.
The production of industrial salts in Lehrte, Germany, as well as the filling operations in Hohenbrunn, Germany, will be discontinued. A total of approximately 140 employees are working at the two sites. In the months ahead, the Works Council and Merck will consider various scenarios for the two sites.
Further cost savings will be realized by a reduction in personnel costs as the result of a restructuring of the compensation system. To strengthen the Darmstadt site within the framework of the "Fit for 2018" program, Merck also plans to invest a total of at least $314 million at this location and other sites within Germany during the next two years. The Darmstadt site, as the global headquarters of the Merck Group, will be expanded further to become an R&D center of excellence, with a tightly networked research and knowledge platform for both pharmaceuticals and chemicals.