MTU Aero Engines has launched a new cost-reduction initiative intended to save 50 million euros annually, the bulk of it already in 2010. This follows an announcement MTU CEO Egon Behle made at the Analyst and Investor Day the company held in Munich on Sept. 26th. Behle reaffirmed the company's 2008 forecast and expects MTU to remain on its profitable growth track even in a troubled market environment.
The new cost reduction program, named Challenge 2010, is designed to enhance MTU's competitive position and prepare the company for a difficult market. By 2010, the initiative is expected to initially yield 25 to 30 million euros in savings; and as from 2011, 50 million euros a year.
The MTU CEO emphasized that the cost savings are primarily related to the entire production chain. The focus is to optimize product costs across MTU's major engine programs. Behle said: “Our focus is on simplifying product design, optimizing processes, improving technologies and materials, and trimming purchasing costs.” He explained that currently these areas were being analyzed thoroughly. By year-end, a concrete roadmap would be in place. Implementation of the various measures would begin next year. Additionally, all MTU areas would contribute to cost optimization under the company's intensified continuous improvement program (CIP).
