Sandvik reduces production capacity and costs

Sandvik reduces production capacity and costs

In conjunction with the presentation of third-quarter earnings, Sandvik provided
information concerning a weaker trend in several market segments. The negative
trend has accelerated during the beginning of the fourth quarter. Consequently,
the Group has decided to implement a number of measures. The objective is to
adapt production capacity and costs to the prevailing demand trend. 

For Sandvik Materials Technology, a global overcapacity corresponding to 1500
persons has been identified, of whom about 1000 persons in Sweden. Accordingly,
the company today gave notice of a personnel reduction totaling 900 employees in
Sandviken and 140 in Hallstahammar. In conjunction with the interim report for
the second quarter of 2008, Sandvik announced a reduction in the workforce with
the aim of raising productivity. Within the framework of this cutback, staff
levels have since been reduced by about 380 employees. The surplus capacity of
1500 persons that has now been identified is due to weaker demand and
constitutes an adaptation of capacity, which is in addition to these 380
persons. The process is expected to be completed during the first six months of
2009. 
Within Sandvik Mining and Construction, temporary contracts with approximately
600 persons globally have been terminated. Furthermore, an agreement has been
reached regarding the possible temporary layoff of up to 200 persons in Tampere
for up to 90 days from 1 December. A decision has also been taken to close the
production unit in Perth, Australia, a manufacturer of surface drill rigs used
in exploration drilling. Manufacturing will be relocated to corresponding units
in Brisbane, Australia, and Santiago, Chile. The closure of the Perth unit, with
approximately 50 employees, is anticipated to be completed not later than 31
January 2009. 

Sandvik Tooling will reduce production in the fourth quarter by utilizing
existing agreements for flexible working hours and similar solutions at plants
in Sweden and in other countries. Some units will close for 2-3 weeks, while
others will temporarily introduce 4-day work weeks. In addition, temporary
contracts with nearly 300 persons will be discontinued.

“The global market trend is currently very weak. The decline described in
conjunction with the report for the third quarter has deteriorated significantly
in several segments, primarily relating to the automotive and engineering
industries. Conseqently, these measures have been deemed necessary, while we
cannot rule out the need for additional measures at a later stage,” says Lars
Pettersson, President and CEO of Sandvik AB.


Sandviken, 20 November 2008

Sandvik AB; (publ)


For further information regarding Sandvik Materials Technology, contact Peter
Gossas, President of Sandvik Materials Technology business area, +46 26 26 36
28. For other information, contact Anders Wallin, Vice President Group
Communications, Sandvik AB, +46 26 26 09 20 or Jan Lissåker, Vice President 
Investor Relations, Sandvik AB, +46 26 26 10 23

Sandvik is a global industrial group with advanced products and world-leading
positions in selected areas - tools for metal cutting, machinery and tools for
rock excavation, stainless materials, special alloys, metallic and ceramic
resistance materials as well as process systems. The Group had at the end of
2007 about 47,000 employees and representation in 130 countries, with annual
sales of more than SEK 86,000 M.