Finnish employees of mobile phone moulder Perlos (Vantaa / Finland; www.perlos.com) walked off the job on 16 January in protest over the "large-scale profitability improvement programme" announced by the company a day earlier. The most drastic efficiency scheme to date in the mobile phone supply sector foresees the elimination of 4,000 jobs worldwide by the end of 2007, including at least 1,200 in Finland. Management termed the walk-out, which was scheduled to end on 19 January, "illegal."

Altogether, about a third of Perlos´ worldwide workforce looks likely to be slashed, and the end of injection moulding in Finland is virtually sealed. Closure of the two sites at Joensuu and Lehmo "is an option," said CEO Matti Virtanen, who has held the position since December 2006. Talks with employee representatives about the future of 1,400 of the 1,600 Finnish jobs subject to labour agreements are slated to begin on 22 January 2007 and last about six weeks. Virtanen did not touch on plans for the other European site, at Komarom / Hungary, but noted that continuing growth in the Asian mobile phone sector would assure that ongoing investments in China and India would proceed "according to plan."

Building on an apparently insufficient EUR 25m profit enhancement scheme begun in early 2006 by predecessor, Isto Hantila, the new CEO hopes to save EUR 100m in costs and return the company to profit by the second half of 2007, or at the latest in 2008. The measures announced this week are aimed at "boosting the efficiency of production processes, purchasing activities and subcontracting." Administrative as well as production jobs are endangered, as many functions are to be centralised.

Speaking to journalists, Virtanen blamed sinking demand in Finland, along with the spectacular bankruptcy of BenQ, an important mobile phone customer in Germany (see Plasteurope.com Web of 06.10.2006), for Perlos´ especially poor performance in last year´s fourth quarter. Although full-year sales rose 10% against 2005 to EUR 674m, Q4 turnover slipped 28% to EUR 144m. The full-year operating profit of EUR 11-12m (EUR 21m in 2005) was wiped out by a EUR 43m non-recurring charge related to the BenQ bankruptcy. The resulting EUR 32-33m deficit could be offset to some extent by a EUR 24m book gain on the divestment of the company´s HealthCare segment – see Plasteurope.com Web of 13.11.2006.

The strategic message behind the restructuring scheme is that Perlos now sees its future in supplying "all segments of the mobile phone market," in particular the low-cost segment, as Virtanen expressed it. This market is clearly in Asia, which Virtanen sees as accounting for most of the 10-12% worldwide growth projected for 2007. Traditionally, the Finnish company has been active in the higher-priced end.

In summer 2007, somewhat later than planned, Perlos plans to start up its two plants at Chennai / India and Guangzhou / China. The Guangzhou facility will have floor space of 35,000m² and thus will be larger than the 16,000m² initially envisaged. Floor space at Chennai will be 20,000m². On the American continent, where production space totals 27,000m², the injection moulder also is expanding its plant at Reynosa / Mexico, which went on stream in 2005. It also operates a plant at Manaus / Brazil. A Perlos spokesman declined to quantify investment costs for the new facilities.

Perlos annual report 2006 see Plasteurope.com Web of 26.03.2007