Facing sluggish sales in some of its largest markets and tough pressure on margins due to adverse exchange rate changes, Mammut Sports Group has decided to close the rope production unit at its head office in Seon, Switzerland. It will be transferred from the start of September 2016 to an Austrian manufacturer, Teufelberger.
While Teufelberger will buy Mammut's machinery and produce the ropes, the Swiss outdoor company's design, development and sales departments for ropes, as well as a dedicated test facility, will remain in Seon.
Boasting a turnover of about €182 million last year, Teufelberger is a family-owned manufacturer of ropes for utilities and other commercial customers, with seven production sites. It has been expanding in recent years, through acquisitions in Sweden and Thailand, as well as the construction of a new production site for wire ropes in Germany, which should be opened next year.
Teufelberger is the former owner of the Edelweiss brand and it still manufactures climbing ropes with the Maxim brand, mostly at its facility in Fall River, Massachusetts. The Austrian company makes much smaller batches of climbing ropes at another facility in Veseli, in the Czech Republic. A spokeswoman for Teufelberger said that the production unit would be enlarged to take care of the production of Mammut ropes. Mammut said that the Austrian supplier's intended investments in this category would add to Mammut's scope for development in the ropes business.
At the same time, Mammut has adjusted its sales structure, bringing together wholesale and retail sales. Given the growing importance of online retailing and own stores, the supervision of all sales was entrusted to Stefan Merkt, who was already in charge of these two areas. He was appointed from the start of October as chief sales officer. Andreas Kessler, who was in charge of wholesaling, will take care of special assignments until his departure, at an as-yet-undetermined time next year. Kessler, the former chief executive of Odlo Sports Group, has been chief sales officer at Mammut since 2012.
Mammut said the restructuring measures would cost 24 out of about 300 jobs at the company in Seon, but the move had become inevitable to secure Mammut's long-term competitive position. Conzetta, the industrial group that owns Mammut, reported in August that its sporting goods unit suffered a decline of 4.2 percent in sales to 99.3 million Swiss francs (€90.9m-$101.9m) for the first half of this year, although comparable sales increased by 1.2 percent. The entity ended the period with an operating loss of CHF 5.9 million (€5.4m-$6.1m) for the first half of the year, compared with profit of CHF 1.5 million. The first half is seasonally weak for Mammut.
Rolf Schmid, the company's chief executive, explained earlier this year that Mammut's business structure made the currency changes particularly unfavorable: While it buys in dollars and sells most of its products in Eurozone countries, most of the company's structural costs are in Swiss francs. Three years ago the company already tried to reduce the exposure by concentrating its European warehousing activities in Germany.
The decision to close the rope production unit was probably all the more uncomfortable since this is the activity that got Mammut started, as an artisan rope-making company established by Kaspar Tanner in 1862. Mammut describes itself as one of the world's three leading brands of climbing ropes. The company said there was no question of moving out of Switzerland altogether. The brand's products are developed and tested at the head office in Seon, which still employs about half of the group's staff.