German specialty chemicals giant Evonik is bracing for a major shake-up that could see its workforce slashed by nearly 20%, with 7,000 jobs on the chopping block.
The company, headquartered in Germany’s industrial heartland, announced its bold restructuring plan on December 13, which involves streamlining its operations and selling off key business units, including infrastructure at multiple sites.
Under the new structure, Evonik will reduce its divisions from four to two, significantly downsizing its workforce. This move follows the supervisory board’s approval of what CEO Christian Kullmann called the company’s most extensive reorganization in history. “We’ve significantly improved our portfolio’s quality over the years,” Kullmann stated. “Now, we need a new structure to harness the strengths of our two pillars under one roof.”
The announcement marks a dramatic escalation from the 2,000 job cuts the company initially outlined in March 2023 as part of a plan to reduce costs by €400 million by 2026. These earlier cuts targeted managerial positions, aiming to trim management boards across the group from an average of 10 members to no more than six. Of the initial 2,000 planned reductions, 500 were managerial roles, while 1,000 managers had their leadership responsibilities reassigned, though they retained operational roles with adjusted salaries.
Evonik’s struggles are emblematic of broader challenges facing Germany’s chemical sector. High energy costs and inflation have driven up production expenses, eroding profitability. Although the company anticipates making a profit this year, sales have plummeted 17%, dropping earnings to €1.7 billion in 2023, down from €2.5 billion the previous year.
Renowned for its diverse portfolio, Evonik produces specialty chemicals and materials for a range of industries. Its products include methionine for animal feed, hydrogen peroxide for bleaching and oxidizing applications, and Aerosil®, a fine filler used in paints, coatings, and rubber. The company also played a crucial role in the development of mRNA-based Covid-19 vaccines by manufacturing essential components.
As Evonik braces for the sweeping changes, it hopes the restructuring will position the company to better weather industry headwinds and maintain its competitive edge in an increasingly challenging market.
