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news.Earlier in October 2009, Lonza has announced its intention to adjust the organization to the more volatile market environment, to reduce fixed cost in the range of CHF 60-80m in the next 18-24 months and to review the detailed business unit strategies.
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In response to the economic pressure, Lonza is strengthening its platform in Asia and will close the sites of Conshohocken (Riverside), PA (US), Shawinigan (CDN), and Wokingham (UK) in 2010. This step complements Lonza’s existing platform in Nansha (CN) and is the response to customer needs for mature regulated products at competitive conditions in a new market segment.
The closure of the sites is expected to affect 175 employees. Lonza has put in place a comprehensive severance package in consultation with local employee representatives and authorities. The total restructuring cost amount to approximately CHF 140m, of which, 75% account to restructuring activities in small molecules. The amount also includes impairments of assets and other restructuring activities and will be booked into 2009, 70% of the charges are non-cash.
The Riverside plant will cease its activities in Q4, 2010. The pilot scale plant for the vitamin K3 activities in Shawinigan will cease its activities by the end of March 2010, after having completed the full technical development of this new technology. Lonza will evaluate further opportunities to provide its customers with chromium-free vitamin K3 from another site in the future.
As part of a modernisation and streamlining initiative within the Lonza Bioscience supply chain, the offices and warehouse in Wokingham (UK) will be closed and the activities will be transferred to Verviers, Belgium. The company said that the Verviers facility already supplies all other countries in Europe and can readily handle orders from UK and Irish customers, while maintaining an equivalent level of service to that enjoyed by customers today.
Stefan Borgas, CEO of Lonza, said: “The closure of the three sites will help to optimize our global operational network and further increase the competitiveness for our customers. The re-engineering project is a key element in our endeavour to bring Lonza back to a sustainable growth. We will continue to drive this project throughout the year and we will see many initiatives rising from it. We are confident that we are on the right track and that the identified measures support the Lonza strategy.”