As Ferrari prepares for the Monaco Grand Prix this weekend, things are not as optimistic back at Maranello. It seems Ferrari are idling plants and seeking to layoff 9% of its workforce. The news came from Bloomberg who reported that employees walked off the job in protest:
Workers walked out for four hours today because Ferrari wants to cut 120 office positions and 150 factory jobs in exchange for the last payment of a 2009 bonus due last month, CGIL union official Giordano Fiorani said today in a telephone interview. The sports-car maker employs about 3,000 people.
Ferrari, Fiat SpAâ€™s most profitable brand, plans to idle a factory in Maranello, Italy, by laying off about 600 workers for a week starting May 17, Fiorani said. Ferrari is scaling back because of fewer orders from Fiatâ€™s Maserati brand, for which Ferrari makes engines, said Ferrari spokesman Stefano Lai, who confirmed the plans to lower headcount and idle production.
It seems one of the contributing factors is the dramatic decrease in engine order by sister company Maserati. Falling from 9,000 units to just 4,500 in one year. This has presented Ferrari with a new focus of only focusing on core operations.
In an e-mailed statement, Ferrari said that the company is focusing its resources on activities such as product development, technological innovation and reaching new customers and has decided to outsource â€œnon-coreâ€ operations. This will allow the carmaker to maintain about 100 contract workers, Ferrari said.
â€œFerrari has to respond to market demands that rise and fall in an ever less-predictable fashion,â€ it said.
The CGIL union says they are willing to talk but are having difficulty with Ferrari’s position:
â€œFerrari has proposed to pay the bonuses if we accept the job cuts,â€ Fiorani said. â€œWe are ready to discuss layoffs and reorganization, as there is a real cut in production, but we donâ€™t understand their rigidity.â€
Sales dropped 7.4% last year equaling 1.8 billion euros. This kind of reduction has to seriously hamper the spirits at Maranello and one could assume it may affect the racing operations as well but then as Ferrari has always asserted, that is a core business and they only sell cars to fund racing. Somehow I think that sentiment went to the grave with Il Commendatore.
We’ll keep an eye on things but I will be intrigued to see if any journalists at Monaco have an opportunity to ask team boss Stefano Domenicali about the financial woes and its impact on the F1 program. I suspect there won’t be any light shed on the issue at Monaco and to be honest, Ferrari will most likely approach their F1 program with the same diligence as they always have but troubled times do require serious re-focus on core competencies and reduced expense.
As a footnote, you will recall Ferrari’s press release in February of this year discussing the very concept of surviving a difficult financial position and crisis economy:
Ferrari holds firm in a year of crisis for the world economy
6,250 cars delivered (-5%)
Investment in new products wholly self-financed equal to 18.5% of revenues
record 200 million page views in 9 months for redesigned Ferrari.com site
Maranello, 15th February 2010 â€“ The Ferrari S.p.A Board of Directors met todayunder the chairmanship of Luca di Montezemolo to examine the end of year results for 2009.
Even though the luxury sports car market suffered an average reduction of 35% in 2009, Ferrari recorded only slightly lower results than in 2008, the most financially successful year in the Prancing Horseâ€™s entire history. A total of 6,250 cars were delivered to end clients (-5%) with a confirmed growth in emerging countries and a controlled contraction in certain of our more mature markets. The sharply contracting market made Ferrariâ€™s market share grow across the board with an average increase worldwide of 10 percentage points, garnering it leadership of the sports car segment.
These results were reached thanks to the completion of the range and in particular with the extraordinary success of the Ferrari California for which 60% of the customers are new Ferraristi.
The most recent car, the 458 Italia, deliveries of which only just started, made no contribution to the 2009 figures, but it has already obtained exceptionally positive reviews and prestigious awards all around the world.
Consolidated revenues at the end of 2009 stood at 1,778 million euro (-7%) with an operating profit of 245 million euro, compared to 341 million euro last year. Ferrari recorded a ROS (Return on Sales) for 2009 of 13.8%. The variation of the operating result is due to the negative effects of volumes and product mix (both of which were extremely positive in 2008) as well as unfavourable exchange rates. The weakness of the US dollar has a major impact since over 30% of sales are made in this currency.
The combination of these effects has been partially compensated by increasing efficiencies thank to the rationalization of industrial processes.
Commenting on the economic figures Ferrari chairman Luca di Montezemolo said: â€œAchieving these results in such a challenging economic climate is the best possible endorsement of the quality and the commitment of all the people of Ferrari and of our strategy focusing on innovation and exclusivity. Those guidelines will also allow us to tackle 2010: it will be a very difficult year and the first small signs of recovery will not come until next autumn.â€
To sustain the strategy of technical innovation and constant renewal of the product portfolio consistent investments in R&D have been made reaching 18.5% of total revenues. This significant financial effort has been wholly selffinanced by Ferrari, which has however closed the year generating a positive cash flow.
The environment represents the other strategic area in which Ferrari in strongly investing. The new trigeneration system (the simultaneous production of power, heat and cooling from a single source) together with the photovoltaic plant enabled Ferrari to decrease CO2 emissions by 15% the, with the goal of reaching a decrease of 25-30% by the end of 2010. Through this ecological system, Ferrari is already almost completely autonomous for its energy requirements.
Analysis of results by geographic area confirms North America as Ferrariâ€™s largest market with 1,467 cars delivered, around 200 less than the previous year. In Europe as a whole, 2,752 cars were delivered, with an overall drop of 6%. Italy and Germany are still our most important European markets, with 655 and 644 delivered cars respectively.
Positive results for Ferrariâ€™s new markets as well. The Middle East, in particular, continues to stand out with an increase of 29% thanks to 471 cars delivered. In the Asia Pacific region a total of 1,117 cars (+3%) were delivered with China confirming its potential with 206 cars, while Japan stood firm in the top five markets worldwide with 8% of total deliveries.
Ferrariâ€™s investments in brand activities (licensing, retail and internet) continued. The retail business grew by 22.5%, thanks in part to the opening of Ferrari Stores in strategic locations such as Regent Street, right in the very heart of London. The Ferrari Store development programme will pursue the plan to reach 60 stores worldwide by the end of 2011. On the licensing front, revenues increased by an average of 10.7%.
A further demonstration of the strength of the Ferrari brand came from Formula One. In what proved to be one of the most disappointing seasons ever, the Scuderia Ferrari Marlboro renewed numerous sponsorship contracts and signed a very important new five-year agreement with Banco Santander.
Ferrariâ€™s internet activities in 2009 were dominated by the complete redesign and relaunch of the www.ferrari.com website which very rapidly accumulated the record figure of 200 million page views in nine months. All the new car launches and the major events were broadcast on the site, including the unveiling of the new Formula One single-seater, the F10 which was watched by over 3 million people. In January, the Japanese version of the site went live and a Chinese version will follow in the course of the year.