SON, THE NETHERLANDS -- Neways Electronics will adjust its organizational structure and lay off around 250 workers in Germany in response to lower demand in key end-marker sectors.

The Netherlands-based EMS company will adapt the structure of two operating companies to better position the company for future growth.

The company is also structurally downscaling its capacity utilization in Germany, due to the lower demand from the automotive sector as caused by the pandemic.

Neways will take an undisclosed one-time charge to its operating results in 2020 to cover the costs to lay off positions, mostly in Germany. The firm estimates the annual cost savings resulting from the adjustments will be fully visible in Neways’ results starting in 2022.

“We do not expect to see an immediate recovery in turnover from the automotive sector to pre-pandemic levels," said Eric Stodel, CEO, Neways, in a press release. "This is reflected in our production volumes, especially in automotive. In addition, we want to create more synergy by adapting two operating companies and position them more effectively in the market. As a group, we will focus more strongly on clients that we can support on several fronts as a system innovator and product life cycle partner, which gives us the opportunity to offer greater added value.

"The adjustment of the organization is a drastic decision, all the more so because over the past few months our employees have shown great resilience. It will be painful to bid farewell, but this is a necessary step if we are to operate competitively in the future and to enable us as a group to move to more robust growth.”

Neways said its has begun preparations for the adjustments, including informing the works councils in Germany and the Netherlands.

Stodel said Neways expects positive cash flow in 2020 due to the stronger focus on costs and cash over the past year, and positive operating results for 2020, excluding one-time items.

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