The slow decline of Salomon continues. After major restructuring and job losses in 2005/6 the group has announced that it will close the Rumilly plant and stop ski production in France. The news has still been a shock for the Haute-Savoie company which only recently celebrated its 60th anniversary. According to a union representative employees “are battered and bruised but were resigned to the decisions taken by Amer sports (OMX:AMEAS) in Finland, they no longer believe in the company”.
Amer sports plans 284 job losses, 250 from the Rumilly staff and 34 at Annecy. Other positions will be transferred to R&D at Annecy. The pain isn’t just being felt in the ranks. On the 22nd of November Roger Talermo, president of Amer Sports called an extraordinary general meeting where he fired Salomon Managing Director Jean-Luc Diard.
The job losses follow a difficult 2007 for Amer Sports. According to Talermo the winter sports market contracted 30% and Diard’s replacement, Bernard Millau, say it is in this context that the decisions have been made. With shops bulging with unsold stock re-order levels for this season had been low. Ski production centered on Altenmarkt in Austria with Metz-Tessy becoming a center of excellence for ski boots, cross country skiing boots and bindings, apparel, walking shoes and bikes (Mavic). As recently as 2004 Rumilly produced 250,000 skis, last year the figure was just 50,000. Ski boot production will cease in Altenmarkt with over 100 job losses.
Amer Sports (turnover 1,792 M€) which also owns Suunto and Atomic acquired Salomon from Adidas in 2005 for € 485 million in 2005. At that time Salomon had 1600 employees with a turnover of € 653 million but profits of just € 28m. Amer says the latest restructuring will cause a one time hit of 40 M€ in its 2007 accounts. It aims to increase worldwide market share from 30% to 40% and says the restructuring will save 20 M€ per annum from 2009. Shares in the group closed nearly 17% down on the announcement.