Intent: VDL Castings Heerlen plans to phase out casting operations

VDL Castings Heerlen intends to wind down operations and cease business activities during 2024. A consultation request with this purpose has been submitted to the works council. Employees, trade unions, and UWV have been informed. The 140 employees of the VDL Groep foundry, of whom approximately 115 are permanent staff, are losing their jobs. The intention is to facilitate their transition to other jobs, whether within VDL Groep’s sister companies or elsewhere. VDL is exploring other activities for the location of VDL Castings Heerlen.

Structural shortage of production volume

Although new markets and new customers for castings have been found in recent times, VDL Castings Heerlen is experiencing a structural shortage of production volume. As a result, the company, which mainly produces grey cast iron components for, among others, the truck market, machinery manufacturing, and rail, sees no prospects for continuity. Significant new investments, with a (too) long payback period, are needed in the short term to adapt and modernise the casting processes. However, the market for casting products instead demands cost reductions, which hinder the necessary increase in production volume. Since its acquisition in 2017, VDL has invested millions of euros in the foundry. Especially new environmental requirements make extensive investments necessary again. Due to the lack of prospects, these investments are not justifiable.

Stricter environmental requirements and rising energy costs

Due to the energy transition, the foundry must switch to electric melting, with all the uncertainties that entails due to the unpredictable availability of the required electricity. Facing stricter (and sometimes unachievable) environmental requirements and rising energy costs results in an uneven economic playing field. In larger industrial countries within the EU, companies receive support through additional energy subsidies. Outside the EU, energy prices are lower because EU sanctions against Russia are not being followed.

It is not expected that these circumstances will improve. This results in a lack of sufficient prospects for a healthy future of the foundry. Therefore, the intention is to wind down the operations and cease business activities during 2024.

Done everything

Director Ruud Pisters of VDL Castings Heerlen: “We have done everything possible to prevent the scenario of scaling down our casting activities. Unfortunately, due to the circumstances, there is insufficient prospect for improvement. Of course, this is hard on our employees who have always committed fully. We will consult with the Works Council and trade unions to ensure that our employees are well cared for.”

Completion

The discontinuation of casting operations at VDL Castings Heerlen will likely take until mid-2024. This period largely depends on how quickly customers will be able to relocate their products elsewhere and what inventories they wish to stock in advance. Due to the phased reduction of activities, employees will also leave gradually.