Syngenta AG (SYNN), the world’s largest maker of crop chemicals, said it will cut or relocate 1,800 jobs as Chief Executive Officer Mike Mack acts to improve earnings that have stagnated in the last two years.
The measures, affecting about 6 percent of the company’s 28,000 employees, will mostly take place in 2015, the Basel-based company said in a statement today. The cuts are part of a savings program announced in February under which Syngenta will save $1 billion annually by 2018. About $265 million savings are expected next year.
“In the short term, this will underpin the realization of initial cost savings in 2015 in the context of a challenging market environment,” Mack said in the statement. Cuts will be in sales, research as well as moving manufacturing to lower-cost locations, Syngenta said.
Mack has pledged to cut costs after currency swings and issues with Syngenta’s corn business have eroded profit over the last two years. Syngenta has inherent currency risk as it reports in dollars though has substantial operations in the U.K. and Switzerland. About 18 percent of costs in areas such as research and manufacturing are Swiss francs and pounds, with only 3 percent of sales in those currencies.
The CEO integrated Syngenta’s seeds and crop chemicals along crop lines in 2011 and today’s cuts are partly an extension of that as Syngenta simplifies management and marketing structures. Paul Barrett, a spokesman for Syngenta, declined to comment on where the job cuts will take place or the split between job eliminations and relocations.
Syngenta, which makes chemicals to destroy weeds, kill insects and treat crop diseases, has significant manufacturing and research sites in Switzerland, the U.K., U.S., China and India.
The company said $115 million of the targeted savings for next year will come from a simplified marketing structure, $50 million from consolidating research and $100 million from measures such as moving some activities to lower-cost locations.
The company was the target of a takeover approach, later abandoned, by Monsanto Co. earlier this year, according to people familiar with the matter. Syngenta also competes with BASF SE, Bayer AG, and DuPont Co.’s Pioneer subsidiary.