Interpretation of Osram Foshan employees' strike events: What does the spin-off of the lighting business mean?

[Text / Gaogong LED Yue Mengdi] Four days after the strike of the OSRAM Foshan factory workers (November 5), OSRAM said that the Osram Foshan factory has nothing to do with "Osram's sale of Foshan Lighting shares".

The key point of the matter is that OSRAM intends to spin off the sale of the general lighting business.

Event tracking

After the strike incident, a spokesperson for OSRAM told Gaogong LED that the supervisory board of OSRAM approved the plan to split its general lighting source business on June 12, 2015. The products produced by Foshan plant are OSRAM universal lighting source product portfolio. As part of the business, the Foshan plant is implementing the strategic resolution of the company's board of supervisors to split the business.

And this may be the cause of the outbreak of employee strikes.

“Employees know that the factory is going to sell, and they are all anxious.” According to an industry insider who asked not to be named, “Many of them are employees who have worked for more than ten or twenty years, and have signed a fixed period with Osram. Some of the labor contracts have been working for more than ten years. (The factory has to sell) to change the new boss, it is necessary to re-sign the contract."

The person close to the Osram Foshan factory believes that employees are worried that the new boss will not recognize the previous working age, and that Osram can make a financial compensation responsibility with the new boss, or the company directly compensates, which led to the strike on Thursday.

According to the news from the Foshan factory, the OSRAM split lighting source business plan did not notify every employee. Some ordinary workers knew from the individual management that the company had to split the business, so there was some concern about the diversion problem.

However, after the incident, Foshan Chancheng Labor Bureau, trade unions and other relevant government functional departments have been involved in the investigation and processing, hoping to resolve it as soon as possible.

Background

It is understood that the OSSU Supervisory Board passed a resolution authorizing the review of the general lighting source business split plan at the meeting on April 28, 2015, and approved the plan at a special meeting on June 12.

According to the plan, the general lighting source business will be split to operate as an independent company, enabling it to better and more flexibly implement multiple strategic decisions including partner strategies in the market. Olaf Berlien, CEO of OSRAM, once said: “The decision made by the OSRAM Supervisory Board today laid the foundation for our commitment to corporate growth and the strategic positioning of innovation and technology leadership.”

OSRAM's future core business will consist of optoelectronic semiconductors, automotive lighting and specialty lighting, as well as luminaires, lighting systems and solutions.

The spin-off and sale of the OSRAM lighting business has attracted the interest of many domestic companies. As early as July 21, Feile Audio (600651.SH) issued a notice to expressly want to acquire the channel business of Germany's Osram spin-off, and issued a non-binding letter to Osram for the acquisition.

Mulinsen (002745.SZ) also issued a notice on the evening of November 6th, authorizing the chairman to represent the company to participate in the bid for the Osram part of the lighting business assets.

And the industry is interested in far more than these two.

Lightly loaded

In fact, the international giant has to split the lighting business, and OSRAM is not the first one, nor the last one. Last year, Samsung launched the LED lighting market outside of Korea. GE will set up a new energy company, or it will fade out LED lighting. Philips' lighting business also reported a valuation of about 6 billion US dollars.

The actions of the three major lighting giants, OSRAM, Philips and GE, are strikingly consistent, and the signal is clear: the general lighting business, which has weak domestic competitiveness and low profit margin, has become their “chicken rib”. "Domestic LED lighting companies are catching up fast, and they have their own characteristics. Whether it is in scale or innovation, domestic companies have not lost international companies."

“Osram hopes that through such initiatives (splitting the general lighting source business and focusing on its core business), the company will be able to further focus on corporate growth, as well as innovation and technology leadership to better respond to diversification in the ever-changing lighting market. Dynamic user demand," said the representative of OSRAM.

Both Philips and GE have the same idea, promptly divesting non-profitable businesses and ensuring a healthy and steady development of their core business. This may be a method that these international giants have been able to exist for so many years.

Of course, a reasonable and legal solution to the events that took place on November 5 will help OSRAM find a better buyer.

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