DSM Announces Staff Reductions in Reorganization of Global Support FunctionsBy
Royal DSM, a life sciences and material sciences company, has announced adjustments to its organizational and operating model fthat will result in a reduction in headcount of 900-1100 full-time equivalents, of which approximately half are in the Netherlands, and which will be fully implemented by the end of 2017. The company is also developing a business improvement and efficiency program for its nutrition business that will be announced on November 4, 2015.
Feike Sijbesma, CEO and chairman of the managing doard, Royal DSM said in a company statement: “In an increasingly global and fast-paced business environment we need to adapt our organizational and operating model to service our customers even better. With the adjustments announced today, we become more agile, focused and cost-efficient. Businesses fully focus on growth, while at the same time we become more competitive by leveraging our global support functions.”
The key change is a globalization of its support functions to capture scale-benefits and lower costs through further standardization of processes, delayering, and elimination of duplication to achieve more efficient pooling of resources with clearer accountability for performance. This will lead to a reduction in size of the support functions in the company’s pharma, polymer intermediates, and composite resins businesses. The new organizational model will apply to finance, human resources, legal, information technology, business services, indirect sourcing, communications, and corporate departments as well as the company’s regional centers. In addition, DSM will implement efficiency measures in its major R&D centers globally. The DSM business groups will continue to focus on the primary functions of the company: innovation and R&D, direct sourcing, manufacturing and operations, and marketing and sales.
DSM estimates that these changes will result in structural savings of EUR 125 to EUR 150 million ($143 million to $171 million) comparative to 2014 and will be fully achieved by the end of 2017. One-off restructuring charges, including severance costs, are estimated at EUR 150 million to EUR 175 million ($171 million to $200 million) before tax.
DSM will also establish an Executive Committee. The members of the Executive Committee will be the managing board members Feike Sijbesma (CEO and chairman), Geraldine Matchett,(chief financial officer), Stephan Tanda (life sciences), and Dimitri de Vreeze (materials sciences), as well as Chris Goppelsroeder (nutritional products), Philip Eykerman (strategy and mergers and acquisitions), Rob van Leen (R&D and innovation), and Peter Vrijsen (human resources). The statutory responsibilities of the managing board remain unchanged.
On a pharma basis, the company’s key holdings are DSM Sinochem Pharmaceuticals, a producer of beta-lactams antibiotics and semi-synthetic cephalosporins, and the company’s position in DPx Holdings, the privately held parent company of Patheon, DPx Fine Chemicals, and Banner Life Sciences formed from the 2014 billion transaction between JLL Partners and Royal DSM. DSM holds a 49% interest in DPx.