Danfoss District Energy has made the final decision to relocate production of Heat Exchangers and Substations from its factory in Leppävirta, Finland. At the same time, plans continue to strengthen the existing sales organisation in Finland.

As a result of this decision, over the course of this year and by first quarter 2011, Danfoss District Energy will move production of Heat Exchangers from Finland to its existing production site in Slovenia. Production of Large Substations will be moved to its plant in Poland. These transfers will reduce the complexity of the business structure and make it possible to realise substantial cost synergies by using existing production sites.

The initial announcement on March 17 of relocation plans was followed by a dialogue process with employee representatives, but unfortunately no viable alternatives to the initial business plans were found. Danfoss District Energy regrets the impact this decision has on its 124 employees in Leppävirta, Finland, and will continue to work together with employee representatives to support affected employees.

“Following the initial announcement, we have had open, in depth discussions with employee representatives. The business case was scrutinised from all sides, and while we have not always been in agreement, the dialogue was constructive. The employee representatives and management have also focused on finding ways to meet employee needs and address their concerns, and through compromise on both sides, an acceptable solution has been found,” says Anton Koller, Vice President, Danfoss District Energy.
 

Over the last few years the financial pressures on the Danfoss Group has increased. This has lead to a number of cost reduction activities, to improve the financial performance and to reduce debt. During this period Danfoss District Energy also experienced declining results and the large station and heat exchanger business was again not profitable in 2009.

The ¬production in Leppävirta is part of the Danfoss District Energy business unit which employs around 1,900 people worldwide. OY Danfoss Ab in Leppävirta will continue to closely cooperate with employee representatives on implementing the plans and supporting the affected employees in Leppävirta.

“We recognise the difficult situation for our employees, and will do our best to help those affected by this decision,” says Tero Kosunen, General Manager, Danfoss LPM Finland, who points out that Danfoss will, among other things, support training and education activities for employees so they are better qualified for re-entering the job market. “The cooperation with employees and employee reps continues to be positive, and we are confident that the transfer will be made in a professional manner.”

The decision will not affect domestic sales. Finland is one of the most important markets for District Energy and Danfoss will therefore strengthen its sales organisation and improve competiveness in Finland.