European pipe extruder Uponor Corp. has announced that it will close down its cross-linked polyethylene (PEX) pipe manufacturing plant in Spain.
The Vantaa, Finland-based group, which is starting talks with employee representatives about the redundancy plan for the unit at Móstoles, intends to switch local PEX production capacity to Sweden.
The work now done in Spain is due to be transferred to another company site at Virsbo in the southeastern Sweden country with a loss of up to 56 Spanish jobs at the plant southwest of Madrid.
As part of its European transformation program announced last year, Uponor is aiming to “rationalize manufacturing and reduce cost in the supply chain and production operations.”
The Móstoles facility has manufactured PEX pipe products aimed primarily at the south European markets.
“Our main PEX pipe markets are in the Nordic countries and Germany, and therefore, the manufacturing location in Virsbo is well suited to serve those customers,” explained Jan Peter Tewes, president of Uponor's Building Solutions – Europe business.
However, Uponor did announce it plans to continue operating its logistics center along with the sales and marketing unit at its Spanish headquarters in Móstoles.
The company made clear that its plan would be discussed with the plant's works council and that it will offer workers there full support over the closure.
Last autumn, Uponor spelled out the challenge it faced in the region. “Continued weak demand in Europe's building and civil engineering markets, declining sales and persistently high costs have eroded our profits in Europe,” stated group president and CEO Jyri Luomakoski.
Uponor announced that, through its European restructuring launched a year ago, it aims to “accelerate profitable growth, greater agility and cost reductions” in its regional segments. This is expected to result in a net reduction of workforce in its ‘Building Solutions – Europe' business of 250 jobs.
Overall, the firm expects to achieve a minimum of 25 million euros ($26.5 million) in operational savings in its consolidated accounts by the end of 2017 of which at least 20 million euros ($21.2 million) should come from that division.