Kone to shed 450 jobs

In order to improve the productivity of its production lines and the cost-competitiveness of its products, KONE is planning to relocate certain supply functions and concentrate production volumes in cost-effective locations. In addition, KONE will continue concentrating certain competencies globally in order to achieve benefits of scale. The initiatives presented in this plan will be implemented in the new equipment business during 2005-2006 and are aimed at returning KONE to double-digit EBIT margin by 2007. In total, the plans affect almost 450 jobs globally in KONE’s elevator and escalator business. Some 300 of these positions - located in Hattingen, Germany - are affected by the plan to discontinue escalator manufacturing in Germany. The plan to concentrate production of electrification components in two locations would affect about 95 jobs in Bristol in the UK. The rest of the positions are located in production units in the U.S.A. and Finland, and in global KONE functions that are indirectly affected by the initiatives to be taken in the manufacturing functions. The measures presented in this program target an annual positive impact on operating income of almost EUR 30 million with much of this effect being felt already in 2006. The total one-time operating income impact of the program, including lay-offs, canceling of long term commitments, impairment losses, and write-offs of fixed assets will be nearly EUR 90 million.