Finnish technology company Wärtsilä has decided to temporarily cut the fixed salaries of its board of management by 20 per cent and launch a number of other actions to mitigate the impact of COVID-19.
As informed, the resulting savings from the salary reductions will be donated to support efforts aimed at combatting the effects of the coronavirus pandemic.
Other steps being taken include reducing working hours and initiating temporary layoffs, as well as streamlining hiring and minimising the use of external personnel and consultants. What is more, the company will reduce discretionary spending and postpone non-critical development projects.
The actions will be implemented locally, depending on country-specific circumstances.
“Wärtsilä expects these measures to generate temporary cost savings in the range of EUR 100 million. The market situation will be continuously monitored and further actions taken as needed,” the company said.
Wärtsilä has implemented special arrangements in all impacted locations such as rearranging shifts and production to avoid contamination, optimised use of multiple sourcing, as well as using virtual tools in testing and validation and in service activities. Remote working is strongly encouraged where possible, enabled by digital collaboration technology.
Most factories are in operation at this time, but they are running at a lower than usual capacity, according to Wärtsilä.
The company further explained that intensifying restrictions are impacting its delivery schedules, access to customer sites, and ability to perform service activities. Supply chains and logistics are also seeing disruptions. Furthermore, deteriorating macroeconomic conditions and the effect of COVID-19 on customer operations are expected to lower the demand for Wärtsilä’s solutions and services. This is expected to materially impact Wärtsilä’s net sales and earnings for 2020 starting in March.
“The full financial impact cannot be quantified at this time, as it will depend on the duration and severity of measures taken to contain the virus spread and the pace of an eventual market recovery. Wärtsilä has decided to withdraw its market outlook for 2020 until visibility has improved,” the company added.
“As the virus and efforts to contain it have spread around the world, we are facing temporary disruptions to our operations and a weakening demand environment. The decision to reduce the worktime of many valuable colleagues is one I take heavy-heartedly, but it is necessary at this unprecedented moment,” Jaakko Eskola, President & CEO of Wärtsilä Corporation, commented.
“Meanwhile, the board of management and I are determined to see Wärtsilä through this crisis…For the next weeks and months, our … focus will be on ensuring the health and safety of our people and the customers, partners and communities we serve. Furthermore, we are dedicated to keeping societies running by securing the flow of marine transport and electricity production.”
With approximately 19,000 employees, the company has operations in over 200 locations in more than 80 countries around the world.