When an operational improvement plan is “comprehensive,” layoffs are likely to follow. Such is the case at Spanish blood and plasma specialist Grifols. It unveiled a far-reaching business overhaul Wednesday in a bid to save 400 million euros a year.
The job cuts, which represent a blow to around 8% of Grifols’ 27,000 total employees, fall under two of three areas outlined in the company’s plan. Aside from plasma and corporate overhauls, Grifols is endeavoring to improve “other efficiencies across the organization,” too.
Grifols figures the move will help it clinch annualized cost savings of roughly 400 million euros (about $427.4 million). However, because the company doesn’t plan to finish rolling out most measures until 2023’s fourth quarter, Grifols only expects to save around 100 million euros this year. “Most of the annualized cost savings will be recognized for income statement purposes in 2024,” the company explained.
“[W]e are convinced that these initiatives are necessary not just to improve our financial performance but also to enable us to become more nimble, more responsive, more decisive and more effective,” Steven Mayer, Grifols’ executive chair said in the press release. Grifols hopes the move will allow it to “become and remain more competitive,” which Mayer described as “essential” to the company’s long-term business strategy.
Taking a closer look at the cost-saving initiatives, Grifols’ first priority is to optimize plasma costs and operations. The goal is to design the “most efficient, contemporary, high-quality and donor-friendly plasma procurement operation in the world,” according to the release. Grifols plan revolves around maintaining plasma volumes while cutting back on the cash cost per liter of the material.
The company will also close or consolidate “underperforming” plasma donor centers, having already closed 18 such centers in the fourth quarter of 2022. Several additional centers are scheduled for closure or consolidation in the first half of 2023, Grifols noted.
When it comes to streamlining corporate functions, Grifols plans to roll out measures to centralize and automate certain roles. The company also plans to consolidate vendors, streamline reporting structures and eliminate duplicate functions and positions.
Finally, the company hopes to reduce operational costs tied to global procurement, logistics and facilities, which Grifols said is due in part to “a real estate rationalization affecting certain offices but not industrial facilities.”
As part of the cost-savings rollout, Grifols expects to take a one-time financial hit of around 140 million euros (about $150 million).
Grifols co-CEOs Victor Grifols Deu and Raimon Grifols Roura credited the COVID-19 pandemic for the move, calling the health emergency an “extraordinary challenge” that marked an “important turning point for many companies around the world.”
“These decisions, in particular those affecting our people, were not made lightly, and have been accompanied by a determination to invest in our talent through implementation of short- and long-term incentive plans designed to reinforce a performance culture,” the co-chiefs added.
As recently as last October, Grifols was flying high as it christened a new plasma purification and filling plant in Dublin, Ireland, where it has pledged to create 200 new jobs in the coming years.