Restoring Business Units by Evonik
Revamped Reorganization: Evonik's Two-Pronged Transformation
Evonik, the powerhouse chemical conglomerate, is shaking up its corporate structure in a major overhaul meant to streamline operations and boost efficiency. This shake-up is part of a strategic three-step plan: reduce, restructure, and revive [1][3][5].
Divisional Makeover
The reorganization will see Evonik's business morph into two key segments:- Custom Solutions: Focusing on niche industries with specialized products tailored to customers, this segment includes additives for paints, coatings, cosmetics, and pharmaceuticals.- Advanced Technologies: Centered on operational brilliance, this division will focus on high-performance polymers and hydrogen peroxide production.
The transformation will slash organizational complexity by decimating hierarchical levels from 10 down to six and wiping out over 3,000 organizational units [2].
The business lines will be placed directly under the Executive Board, ensuring a swift decision-making process and a smoother flow of operations [2].
Upcoming Changes and Expected Outcomes
Evonik plans to slash around 2,000 jobs globally by 2027, with around 1,500 job losses occurring in Germany, predominantly in administrative roles [1][3]. These job cuts aim to generate annual cost savings of approximately €400 million (~$454 million) [1][2][3][5].
The company intends to utilize the freed-up capital and management bandwidth to optimize existing assets and zero in on sustainable growth and internal efficiencies [1][2][3][5].
Evonik has momentarily shelved acquisition activities for the next two years, focusing solely on this restructuring phase [1][3][4][5]. CEO Christian Kullmann emphasizes that this intensive three-step strategy – save, restructure, and grow – warrants a concentrated focus on internal transformation, rather than expansion through acquisitions during this period [1][3][4][5].
Additional Insights
- The company's new, leaner corporate structure will minimize managerial layers and trim approximately 3,600 organizational units [5].
- The potential separation of businesses employing around 3,600 people at the Marl and Wesseling sites may involve forming joint ventures or selling shares to investors or chemical park operators [1][3].
In essence, Evonik's transformation strategy involves merging its operations into two primary divisions, reducing managerial layers and organizational units by 50%, eliminating approximately 2,000 jobs, and targeting €400 million in annual cost savings. This restructuring aims to simplify the company, boost operational efficiency, and set the stage for sustainable growth after the overhaul concludes around 2027.
- Evonik's restructuring plan includes a two-pronged approach, where the company will split into two key segments: Custom Solutions and Advanced Technologies.
- The restructuring aims to decreasing organizational layers from ten to six and eliminating over 3,600 organizational units, as part of the streamlining process.
- In the next few years, Evonik plans to shed around 2,000 jobs globally, with about 1,500 of those being in Germany, primarily in administrative roles, hoping to generate annual cost savings of approximately €400 million.
- As part of this strategic transformation, Evonik has decided to halt acquisition activities for the next two years, instead focusing solely on the restructuring phase and positioning the company for sustainable growth and internal efficiencies.
