Miele Group has announced a “comprehensive” efficiency program, with 2,700 jobs at risk worldwide, to counteract a global slump in demand for appliances and cost increases.

The Miele Performance Program has been created to free up  €500m by 2026, with more than two thirds achieved through improvements in turnover or reductions in material and associated costs.

However, it will also see a “substantial” reduction in personnel costs and up to 2,700 jobs could be cut worldwide or affected by relocation.

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As plans currently stand, up to 2,000 jobs are potentially affected worldwide, chiefly in indirect areas, i.e. persons not operating production machinery or on assembly lines.

According to the Miele, after three years of strong turnover growth in succession, the entire domestic appliance branch recorded a decline in business across the globe in 2023.

It also reported the economic consequences of the war in Ukraine have impacted the situation and is noticeable in the premium segment.

Against this backdrop, the preliminary turnover of the Miele Group dropped by around 9% and in unit sales the decline year-on-year was around double this percentage.

Miele reported there was no indications of market recovery in sight any time soon, with high inflation resulting in higher costs in procurement, for materials and energy, and wages

‘What we are currently experiencing is not just a blip in the economic cycle but rather a sustainable shift in the framework conditions which are relevant to us and to which we must adjust’, the Executive Board of the Miele Group announced to employees in an internal address.

Miele states its Laundry Care at Miele has been hit by “fierce and strong price-driven” competition and to bring it back on an economically sound footing, it will see a reduction in complexity.

In addition, to reduce costs, it will see relocation of further parts of its Gütersloh washing machine production to Ksawerów in Poland.

Subject to the outcome of negotiations with employee representatives, it is also planned to relocate the assembly of almost all domestic washing machine to Ksawerów in stages through to 2027.

In total, this would result in staggered cuts to around 700 jobs at the Gütersloh plant.

The remaining parts of appliance production there, such as the press-shop, the foundry and the machining of castings, would not be affected and would remain in Gütersloh until further notice. This also applies to the assembly of washer-dryers and small commercial machines.

‘These are grave measures, and we are fully aware that this will hit many colleagues hard’, the Executive Board stated.

Which areas will be affected by staff cutbacks and to what extent has not yet been decided, with Miele stating details are to be further fleshed out over the coming months and will be the subject of negotiations with social partners.

Potential downsizing described does not, though, mean that anywhere near the same number of redundancy notices are to be expected, reports Miele.

The Executive Board also stressed: ‘Miele would not be Miele if the pending transformation were not to be conducted as socially compatibly as possible and in close collaboration with employee representatives”.

In the year which marks 125 years of company history, Miele stated a goal is to set the signals for growth.

“We are a family company which thinks in generations and not in terms of quarterly reports”, the Executive Board reiterated as it mapped out the prospects for the coming years.

These included development of new product generations, the construction of a factory in the USA,  takeover of outdoor cooking specialist Otto Wilde and the intended joint venture with Metall Zug AG to strengthen medical technology at Miele.

Miele is represented in almost 100 countries, employs a workforce of around 23,000, of which approx. 11,800 employees work in Germany and sales in the 2022 amounted to around € 5.43 bn.