MAN Diesel ceases engine production in Frederikshavn

The continuing financial and economic crisis and the market forecasts for the maritime sector in the coming years have forced the executive board of MAN Diesel SE to decide on a realignment of the company?s site in Frederikshavn.

The intention is to close the engine production and to transfer the production of the 21/31 and 27/38 engine type series to either other locations of the MAN Diesel production network or, alternatively, to licensees by the second quarter of 2010. The restructuring of the location will entail that the management intends to cut about 500 jobs, thereby halving its workforce.

MAN Diesel?s production location in Frederikshavn is particularly badly affected by the decreasing order intake and cancellations of orders in the shipbuilding industry. Furthermore an overcapacity on the global shipbuilding market, after a period of high growth as well as high inventories, make a fierce price competition in the marine market very probable during the next few years. This development necessitates a realignment of the MAN Diesel Group?s production network in Europe to achieve the most efficient and competitive structure compared to market demands.

“You can say that we are triple-touched by the present situation” Poul Knudsgaard, Site Manager at MAN Diesel in Frederikshavn, states. “Both our order backlog and order intake have decreased significantly since Autumn 2008 and affect our complete scope of products for the marine market, i.e. four-stroke engines, propellers and gears. In addition, we are phasing out our own production of two-stroke engines in the production in Frederikshavn in 2009, since it is no longer cost-effective”.

“We regret this situation forced upon us by the present market surroundings, and will do our utmost to help the affected employees into new employment and secure the historical collection of the local industrial production”, Knudsgaard continues.

With the close-down of engine production, MAN Diesel in Frederikshavn will get a new character with focus on after-sales and propulsion systems. The after-sales business (marketed under the brand name MAN Diesel PrimeServ) will remain in Frederikshavn in its current form. Moreover, Frederikshavn will be the competence centre for propeller and aft ship systems as well as the sales centre for worldwide offshore applications. Frederikshavn will also have a competence team for small-bore field testing. Furthermore, it is intended that the assembly of gears and propellers as well as machining of propeller shafts also will continue on site.

“The after sales market is still growing and the business area for power plants is presently not influenced by the financial crisis to the same extent as the marine market”, Knudsgaard explains. “And the MAN Diesel Group is still investing in the Frederikshavn site. On 26 June we inaugurated our new PrimeServ facilities at Langerak 74 after a comprehensive renovation and upgrading. The PrimeServ centre now appears as a new and modern industrial plant consisting of 5,000 m² owned buildings and 4,500 m² rented warehouse. The rebuilding includes the erection of a new cleaning house, new engine workshop equipped with a 60 t crane as well as extension and renovation of existing workshops and the administration building”.

“We are convinced that this realignment is the prerequisite to provide a sustainable perspective for the future of MAN Diesel in Frederikshavn and that we, on the other side of the financial crisis, will come out as an even more competitive company and maintain our market position as the leading ship engine supplier in the world”, Knudsgaard concludes.