Family business roundup: Merck and Fiat plan to reduce costs

Global volatility looks to be taking its toll on European family-run companies Merck and Fiat, which are respectively cutting jobs and considering closing plants to improve margins.

German family business Merck, which operates in the pharmaceutical industry, plans to reduce its workforce “across all businesses and regions”, according to a statement.

The move comes as the Darmstadt-based group looks to put in place an efficiency programme that was first announced last year. The programme aims to “deliver recurring cost reductions and free up resources for investment in promising areas”, said Karl-Ludwig Kley, chairman of the board, adding that the plan will lead to workforce reductions.

The business, 70% owned by the Merck family through the parent company Merck KG, employs more than 40,000 people across 67 countries. The firm said it will consult employee representatives in each country it operates in before laying off people.

“We have specifically not published potential figures related to the efficiency programme as we are committed to engaging constructively with the relevant stakeholders to achieve a mutually acceptable solution,” Kley said.

While the pharmaceutical family firm, which had 2010 revenues of €9.3 billion, looks at measures to overcome setbacks, a fellow family-controlled automobile group is considering closing some of its factories in Europe.

Fiat, the Italian carmaker controlled by the Agnelli family, said last week that it may shut two of its five domestic car factories in an attempt to cut costs and improve productivity in Italy.

The Turin-based family business, which has a 58.5% stake in US carmaker Chrysler, reportedly wants to offset decline in the European economy and take advantage of the recent revival in the American car market.

“We have everything needed to seize the opportunity to work competitively also for the US market. If it doesn’t happen, then we will have to close down two of the five plants [in Italy],” non-family Sergio Marchionne told Italian newspaper Corriere della Sera.

Founded by Giovanni Agnelli in 1899, Fiat is currently chaired by his descendant John Elkann, who was one of CampdenFB’s top 50 family business leaders in both 2011 and 2012.