http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/RSS.ashxDanfoss Group Global PagesFri, 17 Apr 2009 09:18:40 +0200http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=1http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=1MAKING MODERN LIVING POSSIBLE The crisis hurts 2008 Annual Report Improved climate Prisoners work for DEVI 4 11 22 26 Global Danfoss 2/09 • A Stakeholder Publication English edition2009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=2http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=2Global Danfoss April 2009 Table of contents Page 7 Charity begins at home for Steve Twelve employees at Danfoss Scroll Technologies volunteered to be dismissed – in return, they will be the first to be employed when the situation improves. 7 10 19 Page 10 What does the crisis mean for you? Page 19 Agata is quick to roll up her sleeves Page 23 3x25 Danfoss’ new climate strategy means 25 per cent less CO2 and 25 per cent more renewable energy by 2025. 23 Global Danfoss Published by Danfoss A/S Total number printed: 25,900 Address: Danfoss A/S, L24-212 DK-6430 Nordborg globaldanfoss@danfoss.com Responsible: Ole Daugbjerg Editor: Niels Chr. Larsen Prepress: Christa Hartmann Photographer: Glenn Simonsen Print: Laursen Grafisk A/S Published in Danish, English, French, Spanish, Polish, Slovenian, German, Chinese, Slovakian and Russian. Printed with vegetable colours on environmentally approved paper. Reproduction only by permission of the Editor and always with acknowledgement to Global Danfoss 22009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=3http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=3Leader Now is good to be big By President and CEO Niels B. Christiansen Let me get straight to the point: the situation on the world markets is immensely uncertain. Continuously, we are adjusting our course and deferring those investments which are not urgent. Meanwhile, we have been forced to dismiss many fine employees who have been at Danfoss for many years. I know that managers have strived to deal with this in the best possible way. Cutting staff is necessary, though extremely unpleasant – and I cannot promise you that there will not be any more layoffs. However, my message to you is also one of optimism. We should not take shelter and wait for the crisis to pass. We should exploit the position of strength which we have gained through following our strategy of Danfoss becoming number one or two in the markets. Currently, Danfoss has a lot of muscle compared with many of our competitors. We have many good employees at our disposal who do a great job under the present tricky circumstances and who display a high degree of loyalty and understanding. Also, because of our long-term agreements with banks, we have the required amount of available funds. the cuts in the sales organisation and will continue to develop environmentally- and energy-friendly products which the world will begin to demand. This is about us cultivating activities which relate to the customers. I know this is small consolation to the employee who has lost his job or has had to say goodbye to a good colleague – but overall, we need to act fast and responsibly, so that Danfoss remains solid and strong, even in 10-20-30 years. This is the target we are aiming for – and which we are nearing, in spite of the international crisis. Currently, Danfoss has a lot of muscle compared with many of our competitors. ” It is precisely in times of crisis like this that we need to be pro-active to win market shares. Over the next two to three years, we plan to invest at least one billion DKK in acquisitions, machines, buildings and maintenance. As we did over the past couple of years, we will also invest 800 million DKK in product development. We will of course continue to focus on making a profit, but we accept that profitability will decrease for a while – to enable us to keep future activities going. So, we have endeavoured to limit “ 32009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=4http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=4Focus: Crisis 42009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=5http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=5The world is suffering Lower net sales, less cash, a hiring freeze, a salary freeze, deferred construction projects. The financial crisis swept through Danfoss from the last quarter of 2008 – and took a good deal of jobs with it. Here we keep track of the crisis around the world. The global financial crisis has made its mark all over Danfoss. In particular, the refrigeration division RA has had its share of suffering – where the household compressor business (HC) has suffered the most. The reason is simple: when the bottom drops out of the construction market, fewer refrigerators are needed. At the same time, consumers become more cautious. They hold on to their money and let the old fridge run a little longer. This has hit Household Compressors in the solar plexus and twice as hard, because the area was already characterised by very tough competition and a small profit per unit sold. The downturn has resulted in several rounds of job cuts in HC over the past months. First, at the plant in Zlaté Moravce in Slovakia, then at Flensburg, Germany, and Crnomelj in Slovenia. As of March 1, this totalled 900 fewer names on the list of employees at Household Compressors, which is a 26 per cent reduction compared with the same period last year. »Recently, I read that the local recycling depot receives reduced waste volumes and in particular fewer freezers and refrigerators and this is precisely what hits us,« says Mogens Søholm, head of HC. »We are in close contact with the last link in the chain, so we register with lightning speed when the financial trends shift and people decide after all not to replace their kitchen or the old refrigerator. The market is very uncertain and where we normally operate with contracts which apply between one to three years, instead we have contracts which are applicable for only six months or even letters of intent. This makes planning very difficult.« However, there are also some bright sides. One example is the case where a customer stopped producing their own compressors and instead entered into a contract with HC for the annual supply of half a million TL compressors – which are those that are being produced in Slovakia. »This won’t provide us with a fortune, but it adds to the volume and improved utilisation of the capacity.« One fifth dismissed On the other side of the Atlantic Ocean, in the USA, the number of construction projects has fallen to the level that existed just after the Second World War. Fewer new houses mean less demand for air-conditioning systems, which they are feeling at Danfoss Scroll Technologies’ plant in Arkadelphia, Arkansas. The plant employed 809 people in September 2006, including temporary staff, but from the first quarter of 2007 things began to go downhill. Shortly before Christmas last year, Danfoss Scroll Technologies shut down to minimise the number of lay-offs. But, despite this, in January they had to announce that 122 people would be dismissed – which is approximately one fifth of the workforce.  By: Niels Chr. Larsen 52009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=6http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=6Focus: Crisis »The fourth quarter closure reduced the inventory to better match the size of the order books. In this way, we managed to avoid a larger round of job cuts. Unfortunately it was not enough in the long run – although if we hadn’t introduced the enforced break, the situation would have been even worse,« says HR Director at Danfoss Scroll Technologies, Stephen Strickland. The bottom-line figure now is that Danfoss Scroll Technologies employed 434 people in January – which is almost half of the 809 employees who worked there two and half years ago. Few opportunities left Jumping back to Europe, we call in at Danfoss Drives in Gråsten, Denmark. Here, Preben Storm is in his tenth year as a shop steward. Not so many months ago, he had 600 unskilled colleagues, today there are around 100 fewer. In the first six months of 2008, it was about producing as many appliances as possible. To keep up, orders were handled during weekends, but during the second six months, the situation went from white to black. Preben has never seen anything like this change before and over the past few months, he and the management have constantly tried to compensate for the damaging effects of the decline in the number of customers for frequency converters. »Both the management and the employees have been remarkably flexible in order to find solutions, but unfortunately, the opportunities are soon depleted,« he notes. Since the autumn, the lieu day bump has been diminished, work distribution has been introduced and the colleagues have attended courses in IT and electronics. From September until January, unskilled workers in Gråsten spent a total of almost 3,000 days at training sessions. At the same time, the summer holiday is set to be extended. This will mean fewer holiday replacements and more work for the permanently employed. »The spring usually has an upswing in store for us, but I am not so optimistic. No day passes where we do not hear about cuts and lay-offs. I hope to avoid more lay-offs and that the construction of public-sector projects and building programmes will soon get going so that we can boost optimism.« EU Directive causes setback A few kilometres north of Gråsten in Denmark is Vejle – and the centre of Danfoss Heating Solutions, which mostly deals with electrical floor heating. Eighty per cent of sales at Danfoss Heating Solutions are from Floor Heating Electrical, and Ebbe Knudsen, head of the area, estimates that 95 per cent of the profit is facing tricky challenges. »The EU’s energy directive caused a setback for electrical heating in the former EU member countries. This means that our focus has been transferred to the growth markets in Eastern Europe, but there the crisis has also impacted and it has slowed down our growth rates considerably.« In figures, the calculation shows that a significant progress in the Danube region and a handsome progress in the CIS countries – the former Soviet republics – were devoured by a decline in the old markets in north-west Europe and adding all this up, sales in 2008 have decreased by around ten per cent compared with the year before. Moreover, the start of 2009 did not give any reason for optimism. January was 20 per cent below last year’s level. The bright spot is the sale of hydronic floor heating, which last year exceeded the level of the previous year by 20 per cent, primarily driven by the growth in the sale of the wireless control unit CF2. This year, Ebbe Knudsen expects to be able to maintain this net sales level. A ride on the rollercoaster We’ll end the tour in Moscow. Here Mikhail Shapiro, the President of Danfoss in Russia, has got to be dizzy from the rollercoaster rides that he has been on over the past few years. Only one year ago everything in Moscow was booming. The oil prices were sky-high – which was good for the Russians who have plenty of oil and natural gas. Today oil prices have gone down and many new constructions in Russia have stalled. According to Shapiro’s 2009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=7http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=7Charity begins at home for Steve Twelve employees at Danfoss Scroll Technologies volunteered to be dismissed – in return, they will be the first to be employed when the situation improves. Eighteen-year-old Charity – who was born with cerebral palsy and is in a wheelchair – is looking forward to spending much more time with her stepfather Steve McCoy, very soon. For the last ten years Steve has been a machine operator at the crank case line in Danfoss’ plant in Arkadelphia, Arkansas, USA, but in January he accepted voluntary redundancy – caused by the prospect of 100 lay-offs. Eleven other employees joined Steve, and they have now obtained a guarantee that they will be the first to be employed once the orders begin to pour in at the compressor factory. »I have been at the plant for ten years and I like working there, but now I have the chance to spend more time with Charity and her twin sister, who will both graduate from high school this summer,« says Steve. Throughout his career, Steve has worked during weekends. Steve, and the 11 others who agreed to be made redundant, were not paid any compensation, so he has to cope with his unemployment benefits, which are far below his usual salary. However, he has taken the opportunity to have his pension paid to him and has bought a mini-van with a ramp for Charity’s wheelchair. »It is very expensive, but it is good for the family,« he says, adding that he hopes to return to his job at the end of the second quarter of this year. »I miss my colleagues, but it is a small town so we meet regularly.« By: Niels Chr. Larsen 72009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=8http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=8Focus: Crisis 82009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=9http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=9Sailing against the financial tide The crisis has had a wide effect on Danfoss, but some business areas are doing just fine. Among these is Marine & Power Generation and one of the reasons behind their success is that shipyards all over the world built more supertankers in 2007 than they had ever done before. In the course of that year, shipyards worldwide began construction of as many as 2,500 supertankers, container vessels and huge ferries, and that was good news because Marine & Power Generation produces sensors, among other things, for the regulation of pressure and temperature in the engine-rooms of giant ships. »They are huge machines which take up to three years to build. Now, we are beginning to see the effect of the financial crisis on the construction of ships, but we are also witnessing growth within gas-powered engines and the generation of energy for diesel- or gas-powered generator systems which also operate with many sensors,« says business area director Per Friis Madsen. He says that the business area is also registering increasing sales rates for the wind turbine industry, although not so significantly as previously. Danfoss Solar Inverters is also not able to recognise the picture of a slowdown. The January and February figures were twice those of the same period last year and Henrik Raunkjær, managing director, at least expects a doubling of the 2009 sales compared with last year. 150 employees at Solar Inverters are producing inverters which transform direct current from solar cell systems into alternating current for connection to the power supply network and Henrik Raunkjær is optimistic, not least because of the EU’s target to cover 6-12 per cent of the energy consumption by solar power in 2020. »However, like the rest of the world, we are of course very unsure about 2009, especially whether we can fund solar power systems.« Within the heat pump business, Danfoss Heat Pumps, a range of companies have been acquired since 2005 – six in total – and Claus Bo Jacobsen, head of the business area, is pleased with the net sales records over the past five months in succession. Last year, net sales increased by approx. 13.4 million euros and this figure remains the target for this year. He also puts his faith in the impact of the EU’s new energy directive which categorises heat pumps as renewable energy. »It is a huge help. Many countries are already well under way with the launching of subsidy schemes. And we hope that these measures combined with ours will restrain the decline that we, of course, also feel each day.« At one of the old business areas, Heating Controls, senior vice president Kim Christensen has noted that, during the first seven weeks of 2009, the sale of radiator thermostats was at the same level as it was in 2008 – in spite of the significant drop in the building sector. And he is also turning towards Brussels, where the Commission and Parliament have adopted an assistance package of which a major part will be spent on environmentally friendly transport and energy renovation, including such measures as the re-insulation and upgrading of heating installations in existing constructions. »If the estimated 500 million manual valves mounted in EU countries were replaced with thermostatic radiator valves, we would save at least 50 million tonnes of CO2 – and, thereby, solve a big proportion of the entire climate crisis. To us, the future is bright, even though we might also get some bruises in the short run.« By Niels Chr. Larsen 92009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=10http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=10By Niels Chr. Larsen Q&A Questions and answers. On this page we will focus on a central issue in each edition of Global Danfoss. This time, we ask Malika Verseaud and Mikhail Katin. Malika has worked as a machine operator for Danfoss Commercial Compressors in Reyrieux, France, since 1976. Mikhail is a sales engineer at Danfoss in Moscow, in charge of selling as many Danfoss parts as possible to the construction projects going on in his part of the city. He joined the company three years ago. Please forward any suggestions for discussion topics to the editorial team. What does the crisis mean for you? How has the crisis changed your daily work? Malika: I’m worried like everyone. Up to now we have not been affected very much in our daily lives at work – for example, there haven’t been any temporary lay-offs. In the past, Danfoss CC has gone through ups and downs, but not a crisis such as today. Despite the situation, I am staying confident. Mikhail: The crisis influences my everyday routines in that I have to work with the projects more thoroughly and try to outdo the competitors to maximum effect. It is necessary to get and to process the specifications quickly; to make the quotation, to meet with partners and to decide on supply questions with the responsible person. In this situation everything should be done very quickly. In your view, how has Danfoss tackled the crisis so far? Malika: So far, which means January 2009, Danfoss CC has handled the low activity situation by closing factories and putting the workforce on vacation. This has helped to avoid a negative impact on our salaries. Mikhail: From the employees’ point of view, Danfoss has treated us loyally and has kept wages and all major privileges on a social level the same, so the employees’ motivation remains as before. In terms of the customers, Danfoss has managed to enter into durable payment agreements in every single customer case and still keeps large stocks at the warehouse. For the Russian market this is very important. What do you think of this year‘s salary freeze? Malika: The cost of living has increased, and this year will be difficult for me and my colleagues. We would have preferred an increase in our salary, but if this is necessary to maintain employment… Mikhail: Negatively - because I have loans in dollars that go up along with the rise in rates, so my income decreases and it hits me in my pocket. Add the flat rent into the equation and there isn’t enough money to go around. It’s a disaster! On the other hand, I will strive to do my work in a more efficient and effective way, with the aim of receiving a high bonus. Malika Verseaud Mikhail Katin 102009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=11http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=11Annual Report 2008 – in brief MAKING M ODERN LIV LE ING POSSIB port 2008 e R l a u n n A 112009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=12http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=12The effect of the global crisis and the development of the fourth quarter in particular meant that the Danfoss Group’s growth in real figures only increased by 2% in 2008. Meanwhile, due to the accounting adjustments performed following the group’s takeover of the controlling interest in the listed company Sauer-Danfoss, the profit for the year was -157m DKK compared with 1,063m in 2007. Global crisis cuts growth, while accounting adjustments result in zero-profit Net sales increased by 22% to 27,127m DKK from 22,196m DKK in 2007. When adjusted for acquisitions (including Sauer-Danfoss), divestments and foreign currency translations, growth was 2% compared to 12% in 2007. The divisional organic growth was 9% at Danfoss Motion Controls Division, 4% at Danfoss Heating Division, whereas the net sales of Danfoss Refrigeration & Air Conditioning Division decreased by 3%. Sauer-Danfoss grew by 2%. Danfoss, excluding Sauer-Danfoss, developed reasonably well during the first nine months of the year, with the market development changing dramatically during the fourth quarter. Growth in the net sales for the first nine months amounted to 5%, but decreased by 8% in the fourth quarter (adjusted for acquisitions and divestments and calculated at last year’s exchange rate). The reduced net sales resulted in a reduced use of capacity, which had a negative impact on earnings, because it was not possible to introduce corresponding cost reductions. Unfortunately, the reduction in earnings also meant that Danfoss, excluding Sauer-Danfoss, was forced to reduce the workforce. In connection with the reduction in force, nonrecurrent costs and provisions amounting to 145m DKK for the entire year are included in the Profit & Loss Account. In the course of the second half-year, Sauer-Danfoss’ net sales and profits were hard hit by the financial crisis. This trend – along with the fact that the company’s primary off-peak period is the second half-year – meant that the company ended the second half-year with a deficit. As Sauer-Danfoss’ profit is only included in the group accounts in the second half-year, the result also had a negative effect on Danfoss’ result. Therefore, the development of Sauer-Danfoss’ result does not live up to the management’s expectations and is not considered satisfactory. On the whole, the 2008 accounting year did not live up to the group’s expectations from the beginning of the year. The financial crisis on the American market, which had a negative effect on sales during the second half of 2007, both continued and strengthened in 2008. During the first half-year, the financial crisis extended to several of the group’s markets and the crisis rapidly developed into a global recession. In the course of the first half-year, the setback and initial nervousness in several markets had varying degrees of impact on Danfoss’ product areas and markets. However, this led to a downward adjustment of the expectations of Danfoss’ net sales and profit after the first half of the year. The adjusted expectations included net sales of 28-29bn DKK and operating profit (EBIT) of between 1.2-1.8bn DKK. As a result of the acquisition of the Sauer-Danfoss shares, the profit was also negatively affected by accounting adjustments, which at the time were estimated to be between 300 and 600m DKK. The setback and the nervousness on the markets intensified during the third quarter and in particular, the decline in sales to construction projects, infrastructure and manufacturers of household appliances characterised the group’s situation. As a result of the development of the first nine months and the major uncertainty concerning the fourth quarter result in particular, a downward adjustment of the expectations for the net sales and the profit was made for the second time in 2008: expectations for net sales were reduced to between 27-28bn DKK, while expectations for EBIT was changed to between 0.6bn DKK and 1bn DKK. An assessment and adjustment of the cost 2009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=13http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=13the group’s customers were reluctant to place orders, and shut down their production sites earlier than usual before the holiday season. While growth increased by 5% during the first nine months of the year, the net sales fell by 8% in the fourth quarter. The sales on the European main market fell marginally compared with the year before, but in spite of the setback, sales did increase in a few markets such as in Poland, Germany and the UK. The markets in Latin America, Russia and China also showed growth, though considerably less than before. The American market development was somewhat favourable. The unexpected reduction in net sales in the 4th quarter resulted in a reduced use of capacity. This had a negative impact on earnings, because it was not possible to bring down the operational costs at the same rate. In order to optimise the processes even more, Danfoss has a sharpened focus on the group’s cross-divisional improvement projects, which are gathered under the Danfoss Business System. The projects are cost-intensive in the short-term, but will help the long-term protection and improvement of Danfoss’ competitiveness. The high price of raw materials and the low US dollar exchange rate in the first half-year of 2008 had a negative impact on the net sales and profit. Falling prices and the fluctuating US dollar in the autumn did not have a noticeable effect on the group’s result. Danfoss has hedged some of the currency exposures for a period of up to 12 months and parts of its consumption of raw materials for up to 15 months. In conclusion, the 2008 financial result does not live up to the expectations of the management and is, therefore, not considered satisfactory. Thanks to increased cost control, the drop in earnings was minimised without having to cut back the projects which will help secure the long-term development of the group’s compe-titiveness. ing the acquisition of the controlling interest in Sauer-Danfoss amounting to 386m DKK. It was also affected by costs incurred in connection with workforce reductions. The lack of orders, nonrecurrent expenses for the workforce reductions and an unsatisfactory result for Sauer-Danfoss meant that the group did not reach its profit targets. The share of profit from associates/joint ventures was 44m DKK compared with 210m DKK the year before. Sauer-Danfoss is included in the result in the period up to and including the second quarter. It should also be considered that, this item was affected positively in 2007 by the 186m DKK gained from the divestment of Damcos A/S. The profit before tax decreased to -125m DKK from 1,378m DKK. Danfoss’ profit for the year was -157m DKK compared with 1,063m DKK the year before. Danfoss’ profit for the year (excl. Sauer-Danfoss) was 342m DKK compared with 1,063m DKK the year before. The bottom-line result is clearly not satisfactory. Employee numbers At the end of 2008, the Danfoss Group employed 31,717 people, an increase of 9,394 employees compared with 2007. During the course of 2008, the number of employees increased by 9,584 as a result of the acquisition of additional shares in Sauer-.Danfoss Inc. The Group’s employees are distributed as follows: 13,410 in Europe (excl. Denmark) (2007: 10,334); 5,165 in North America incl. Mexico (2,626); 516 (220) in Latin America; 3,912 in Asia-Pacific incl. China (2,609) and 69 in other regions (69). In Denmark, 8,645 people were employed at the end of 2008, compared with 6,465 the year before. Expectations for 2009: The result before other income and expenses fell to 687m DKK from 1,634m DKK in 2007, which was a decrease of 58%. The result was negatively affected by, among other things, accounting adjustments amounting to 386m DKK following the purchase of the controlling interest in Sauer-Danfoss. The profit before other operating income and operating expenses for Danfoss (excl. Sauer-Danfoss) was 1,146m DKK compared with 1,634m DKK in 2007. Adjusted EBIT was 891m DKK compared with 1,687m DKK the 2009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=14http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=14Since it is not possible to minimise operational costs proportionally with the development of activities, there is a risk that Danfoss’ profit for the first half-year will be more negative compared with that of the second half-year. The impact of the global crisis means that Danfoss’ investment in Sauer-Danfoss will not lead to any short-term increases in the profit. However, Danfoss still has confidence in Sauer-Danfoss’ positive long-term prospects and that it will add to the Danfoss Group’s total growth rates. Prerequisites and risks: The recession is expected to continue in 2009, and it is highly likely that it will take 24-36 months before the financial trends improve. Consequently, no growth is expected during 2009 on the group’s markets. The markets in China, India and the USA are expected, however, to show mediocre growth rates. To meet the targets, it is vital that costs are strictly monitored and expectations are that the cost level will not increase compared with 2008. One major contributor is the intensified focus on cross-functional improvement projects controlled by Danfoss Business System. The decreasing prices of raw materials are not expected to have any short-term effect on the group’s profit. Danfoss has hedged some of the currency exposure for up to 12 months and a major part of the consumption of raw materials for up to 15 months. Dividends and Annual General Meeting The Board proposes that the dividend for the 2008 financial year be fixed at 20%, compared with 25% in 2007, corresponding to approx. 205m DKK (2007: 255m DKK). The dividend will be paid in Danish kroner and 28% Danish dividend tax will be deducted from dividends paid to Danish shareholders. For shareholders outside Denmark, dividend tax will be deducted according to the joint taxation agreements held at VP Securities Services. The Ordinary Annual General Meeting will take place in Nordborg, Denmark, on April 24, 2009. 142009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=15http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=15Financial highlights (DKK) mill DKK mio. DKK 2004 2005 2006 2007 2008* 2008** PROFIT AND LOSS ACCOUNT Net sales Operating profit added depreciations, amortisations and impairments (EBITDA) EBIT excl. other income, etc. Adjusted EBIT Operating profit (EBIT) Income from associates and joint ventures after tax Financial items, net Profit before tax Net profit BALANCE SHEET Total non-current assets Total assets Equity Net interest-bearing debt Net assets Capital expenditure CASH FLOW STATEMENT Cash flow from operating activities Cash flow from investing activities hereof acquisition of intangible and tangible fixed assets hereof acquisition of subsidiaries and activities Free cash flow before M&A Free cash flow Cash flow from financing activities NUMBER OF EMPLOYEES Number of employees (headcount) KEY FIGURES EBIT margin excl. other income, etc. EBIT margin Adjusted EBIT margin EBITDA margin RONA Return on equity Equity ratio Leverage ratio Dividend ratio DEFINITIONS RONA (Return On Net Assets) Operating Profit (EBIT) as percentage of average Net Assets. Net Assets is Total Assets deducted Investments in joint ventures and associates, Cash and cash equivalents, Provisions and Non-interest bearing debt. EBIT margin Operating Profit as percentage of Net Sales. 16,345 1,746 907 1,128 1,072 94 -235 931 699 16,416 1,699 914 952 947 82 -22 1,007 740 19,428 2,425 1,411 1,632 1,601 91 -290 1,402 1,038 22,196 2,576 1,634 1,687 1,616 210 -448 1,378 1,063 22,786 2,104 1,146 1,108 1,005 27,127 2,099 687 891 410 44 -579 -125 -157 6,497 13,101 7,653 167 7,003 1,507 7,665 14,562 8,485 825 8,373 1,867 10,132 18,534 9,035 2,866 10,736 3,401 11,054 19,857 9,744 3,737 12,227 1,931 11,511 1,856 21,237 32,928 11,867 9,776 21,326 12,614 1,232 -951 -1,289 355 -53 281 -705 1,192 -1,626 -1,028 -504 78 -434 177 1,321 -3,020 -915 -1,936 396 -1,699 1,877 1,016 -1,593 -1,399 -310 -423 -577 431 926 -850 1,428 -4,543 -2,167 -2,383 -639 -3,115 3,050 17,543 18,168 20,612 22,323 22,133 31,717 5.6% 6.6% 6.9% 10.7% 15.6% 9.4% 58.4% 2.2% 15.0% 5.6% 5.8% 5.8% 10.4% 12.3% 9.2% 58.2% 9.7% 18.0% 7.3% 8.2% 8.4% 12.5% 16.8% 11.9% 48.6% 31.8% 20.0% 7.4% 7.3% 7.6% 11.6% 14.1% 11.4% 49.0% 38.4% 25.0% 5.0% 4.4% 4.9% 9.2% 20.0% 2.5% 1.5% 3.3% 7.7% 2.4% -0.9% 36.0% 82.4% 20.0% EBITDA margin Operating Profit added Depreciations, Amortisations and Impairments as percentage of Net Sales. Adjusted EBIT margin Operating Profit added cost, Deprications, Amortisations and Impairment related to the Purchase Price Allocation in connection with Business Combinations as percentage of sales. Return on Equity Net Profit as percentage of average Shareholders’ Equity. Equity ratio Shareholders’ Equity as percentage of Total Liabilities and Shareholders’ Equity end of year. Net-interest bearing debt Net-interest bearing debt is recorded as debt including and excluding security deducted cash funds. * Financial figures are exclusive of the Sauer-Danfoss Inc. acquisition and are therefore comparable with previous years. ** Financial figures include the Sauer-Danfoss Inc. acquisition and are therefore not immediately comparable with previous years. In the case where the Danish Association of Financial Analyst defines the above ratios, the ratios are computed according to these definitions. 152009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=16http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=16162009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=17http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=17Corporate Citizenship Danfoss aims to actively contribute to a global, sustainable development where social responsibility, and a high concern for people and the environment, goes hand in hand with sound business development. Danfoss’ overriding goal within Corporate Citizenship is to "keep our own house in order". The goal applies, in a broad sense, to social and ethical responsibility. Danfoss is constantly intensifying its efforts, because it believes that when employee satisfaction is high, consumption of resources is as low as possible, and the company’s ethics and reputation are good, the result is a positive effect on the bottom line. Danfoss’ environmental and social responsibility policies have not yet been implemented in Sauer-Danfoss. Over the long term, Danfoss aims for the entire Corporate Citizen report to be the subject of external verification. Danfoss cooperated in 2008 with PricewaterhouseCoopers to integrate relevant indicators from Global Reporting Initiative (GRI) into the annual CSR questionnaire, which is distributed to all companies. Social responsibility systematised Danfoss has since the joining of the UN Global Compact in 2002, initiated a similar approach for social activities. The ten principles of Global Compact have been continuously integrated into a long range of processes and business procedures. It is not unlikely that companies with a global reach operate in countries that do not respect human or labour rights. Knowledge about which countries and which issues could present problems are vital. Cooperation between Danfoss and the Danish Institute for Human Rights has resulted in country-risk analyses prepared for all countries where Danfoss has production sites. The analysis’ are continually updated and used as basic information for planning responsible supplier management, but also as the basis for indepth talks about local issues in connection with visits at suppliers and Danfoss plants. In 2003, Danfoss implemented its CSR policy and reports on social responsibility covering human rights, labour rights, ethics and anticorruption. Danfoss reports on social issues are based on the CSR survey, a questionnaire distributed electronically once a year. The survey covers all of the group’s plants and sales companies and includes questions about issues such as human rights, labour rights, as well as corruption and bribery. Ethics In 2008, Danfoss published an internal Ethics Handbook including ethic guidelines for every Danfoss employee globally. The Ethics Handbook describes the unwritten rules for what Danfoss employees should particularly pay attention to, and what not acceptable behaviour is. Each people manager is asked to sign a declaration that they will comply with the guidelines in the Ethics Handbook and that they will communicate the contents of the Ethics Handbook to their employees. Danfoss has also set up a call service to answer questions about ethical issues and an Ethics Hotline for the reporting of cases where ethical guidelines may have been violated. In addition to establishing these forums, manDeveloping talent and competencies Motivating and nurturing talent as well as identifying and developing the talent form a critical cornerstone necessary to meet Danfoss’ business goals. Leaders must show the way Danfoss top management knows that in order to achieve the ambitious business goals, and to lead employees successfully during turbulent times, managers’ leadership competencies need to continuously be developed. Leadership in a high performing organisation is the foundation in order to achieve Danfoss’ aspirations. In 2008 the Danfoss Leadership Competencies were updated and revised to reflect the business challenges Danfoss faces, and to incorporate the necessary behaviours to develop and support a highperforming organisation. One of a Danfoss leader’s most important tasks is to make sure that strategy and objectives are translated into concrete, relevant work assignments for emp2009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=18http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=18Talent identification and development is the responsibility of the individual leader, but HR provides guidance and tools in the form of Danfoss Talent Management. One of the cornerstones of Danfoss Talent Management is the Accelerated Development Programme (ADP) and the talent identifi-cation which is part of the programme’s selection process. The objective of ADP is to locate and develop leader talents throughout the group. Forty talents are selected for participation in an extensive clarification and leadership development process including a course at an internationally recognised business school, followed by a development process which combines individual sessions and group work, among other things. Building employees competences through on-the-job training and other courses and education is crucial in the sharpened global competition. Danfoss views it as a lifelong process and commits major resources to supplementary training for employees. Training also improves employees’ adaptability and employability. In 2008, Danfoss invested 104 million DKK in external supplementary training, which level with 2007. At the same time, there was significantly increased focus on a wide range of internal training and supplementary training activities. In 2008 the Global Education and Training function registered 8,253 participation days compared to 5,331 participant days in 2007. Danfoss Business System also focuses heavily on training employees and managers throughout the Group in order to develop a strong culture of continuous improvement. In 2008, Danfoss Business System established the Danfoss Academy, to further systemise this training. Work accidents The number of work accidents at Danfoss has dropped since 1999, when the frequency of accident rate exceeded 28. In 2008, the rate was 16.8. The frequency of accident is defined as number of accidents per 1 million working hours. The company had 329 accidents resulting in at least one day’s absence in 2008. The injured employees were absent for a total of 6,850 days, which equals an average of 20 days of absence per accident. Danfoss committed to climate improvements Danfoss aims to contribute as much as possible to global efforts to reduce CO2 emissions from energy-consuming processes and systems. Danfoss’ products save energy for the customer and shall as little energy as possible. The company also wishes to ‘take its own medicine’ by using its knowledge and products to reduce Danfoss’ emission of greenhouse gases resulting from production and transport. In 2008, the Group began the process of setting ambitious targets for the development of energy consumption and the emission of greenhouse gases. At the end of 2008, the work resulted in a climate strategy which has been approved by top management. Danfoss is aiming for an annual cut of 1% in total CO2 emissions related to transport and energy consumption in the period until 2025. This may not sound much, but with compound interest, the end result will be a 25% reduction compared with 2007 emission levels. The target is in absolute figures. No matter how much Danfoss expands, the annual CO2 emis-sions must be reduced by 5,000 tonnes compared with the level in 2007. The 2007 level was approx. 250,000 tonnes, which covers both transport and energy consumption. In real terms, the annual CO2 emissions must be reduced by more than 5% which equals more than 15,000 tonnes. The climate strategy also specifies that the share of CO2 neutral sources of energy should be increased by 25% before 2025. In 2008, the total share of CO2 neutral energy amounted to 23. Danfoss has always considered energy savings and environ-mental improvements when planning the production processes. This means that the easy-wins have been achieved and that it will be a lengthy process and require substantial investments to achieve the targets. In 2008, Danfoss emitted approx. 180,000 tonnes of CO2 generated from the group’s consumption of electricity and heat. The sour2009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=19http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=19Agata is quick to roll up her sleeves By Ole Kanstrup Problems that arrive on Agata Syropolska’s office desk don’t end up filed in drawers or hidden away on dusty book shelves. Agata, a sales coordinator at Danfoss in Poland, who is this quarter’s Values Ambassador, thinks that problematic assignments should be solved fast. »If a customer calls with a problem, Agata does not hang up until she is certain what it is all about – and then she deals with it,« says Agata’s manager, Dorota Jezierska, National Sales Director, HE in Poland. Rescued from a cold winter She refers to a case that involved a large number of Danfoss balancing valves, which a housing association in Warsaw had installed in six of its blocks of flats during the autumn. The function of the valves was to transfer hot water from the heating system in the cellars of the buildings to the radiators in the living-rooms of hundreds of tenants. The problem was that the valves mounted in three of the blocks did not work when the frost settled on Warsaw at the beginning of December. The management of the housing association were in uproar, but then the issue landed on Agata Syropolska’s desk. Immediately, she checked the valves in the cellars, talked with the plant and put together a temporary plan so the occupants were provided with heat a few days later. At the same time, she promised the housing association that Danfoss would make a thorough check of the heating systems of the flats and install new upgraded valve solutions – free of charge. »The mistake was Danfoss’, and Agata took full ownership without hesitation. In such a situation, customers do not want evasive explanations, they need fast alternatives. That was what Agata provided,« points out Dorota Jezierska. But where does the motivation to grapple with such problems without hesitation come from? »I don’t really know – what I do know is that it has always been part of me. At school, I was one of those pupils who prepared well. I always did my homework,« says Agata Syropolska. Agata Syropolska joined Danfoss in 2003 and lives in Warsaw with her husband and three children. Each quarter, the Executive Committee appoints a Danfoss Values Ambassador. This time, it is sales coordinator Agata Syropolska, Poland. 19Piotr Śliwiński Photo:2009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=20http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=20Xu Zhihua at the bolt welding station No earmuffs, no bonus By Niels Chr. Larsen At first the employees at Danfoss Qinbao in China were not at all enthusiastic about wearing earmuffs, gloves or safety shoes. But now they are – thanks to a bonus system that combines safety and the 5s rules – which are about tidiness and orderliness. 6s audits – the new name used at the factory, which produces heat exchangers – are held every week and the employees are marked down if they don’t protect themselves correctly. Locally, safety is now fully integrated into the bonus system, along with productivity and scrap. The system was introduced six months ago and General Manager Daisy Xu has noted that this has improved safety. »We have numerous noisy machines and I am convinced that we will have fewer issues with hearing difficulties now that everyone is under the obligation to safeguard themselves – while also seeing that they can gain financially,« she says. The heat exchanger parts are processed in large machines under a high pressure. Last year there were two minor accidents at the factory, both caused by human error, so Daisy Xu has taken the initiative to clarify how to prevent that sort of incident. Xu Zhihua joined the plant four years ago. He works at the bolt welding station and has started to wear safety glasses, gloves and earmuffs. »This provides effective safety. I now know that Danfoss not only runs the business to earn money, but is also concerned about our health,« he says. 202009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=21http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=21Notes Department manager dresses up William Keith Tucker, a department manager at Scroll Technologies in Arkadelphia, Arkansas, thought that motivation among the employees needed a boost. So he laid down a challenge to them. If they managed to produce 675 compressors during a ten-hour shift on a certain date, he would wear a dress at the first board meeting of the day. The employees duly reached their target and William dressed up. The next challenge was to see William with a flaming Native American hairstyle if 700 compressors were produced in one shift. Again, the employees hit the mark. On February 12, William showed up at work red haired. William says that the employees’ efforts show that DPP does have an effect when everybody in the same department cooperates. Hero’s prize for saving colleague’s life Thorkild Thomsen, a former pipe-fitter at Danfoss, has been awarded 1,300 euros from the Carnegie Hero Fund Commission in December because he saved the life of a young colleague five years ago. It happened when Thorkild Thomsen was out driving the service vehicle with another colleague and they came across a young man lying beneath a pallet weighing several hundred kilos. They quickly tried to free him and with the help of other people who came running, they managed it. Yet the lifting resulted in Thorkild Thomsen suffering a back injury, which means he cannot work as a pipe-fitter anymore. Function manager at Industri Service, Henning Larsen, nominated him for the prize. In the photo is Thorkild with his wife Ellen. Power house Thick insulated walls and a 60 square metre electric solar panel system built into the roof mean that a new energy house in Sønderborg, Denmark, produces the energy that its residents need – and sometimes even more. Danfoss has contributed with, among other things, the house’s heat pump, solar system, air-conditioning system and floor heating. The house is 200 square metres and is jointly constructed by SIB, Grontmij|Carl Bro, Project Zero, SYD ENERGI and Danfoss. Ukraine looks back on famine In November 2008, Ukraine marked the 75th anniversary of the country living through the worst famine in its history. The Holodomor famine, which took place from 1932 to 1933, is said to have killed between three and seven million Ukrainians. In memory of the victims, a 34-metre tall granite monument has been constructed in Kiev, shaped as a candle. Danfoss Floor Heating Electrical has supplied the cables for snow-melting in a marble staircase leading down to a special remembrance chamber beneath the Holodomor monument. The architects found it important that, among other things, the snow-melting did not incur high-running costs, so they chose the thermostat Devireg 850. The memorial will be one of Kiev’s most important attractions. 212009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=22http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=22222009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=23http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=233x25 Danfoss’ new climate strategy means 25 per cent less CO2 and 25 per cent more renewable energy by 2025. Some figures are simply so big that it is difficult to relate to them. For example: it is difficult imagine the extent of Danfoss’ total CO2 emission. In 2007, it amounted to 270,000 tonnes – from plants, the transport of goods and employees travelling between different Danfoss units. Ehm, how much space does 270,000 tonnes of gas take up? For information: this equals the contents of a balloon with a diameter of 650 metres. When the figures are broken down, things immediately become more tangible. Now we know that every Danfoss product travels 2,700 kilometres on its way to the customer. We also know that the employees’ flights over a one-year period correspond to travelling 5,000 times around the Earth. Furthermore: major savings can be obtained if only 10 per cent are persuaded not to travel by plane, but to hold a video meeting at their place of work. This would save 30,000 hours spent on travels and waiting time – in only one year. These are the sort of large and small figures that form the basis of the climate strategy adopted by the Executive Committee in January. In advance of this, a team ploughed through piles of statistical material and against that background, the Executive Committee decided that by 2025 the company is only permitted to emit 75 By Niels Chr. Larsen  232009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=24http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=24per cent of the CO2 that we did in 2007. This roughly equals an annual reduction of 1 per cent although in real terms, this figure will grow, because we are expanding and will consume more energy as a consequence. So, the increase will have to be saved elsewhere. Therefore, it is a rather extensive initiative and it will affect the daily operation of, not least, the factory areas where the most energy is consumed. Taking one’s own medicine Danfoss Business System (DBS) will make sure that the new climate strategy is practised and incorporated into the daily running of Danfoss. DBS already heads the major change programmes which over the past five years have been implemented within production, sales, purchasing and the development of new products. The reasoning of the Executive Committee is that considering DBS is already creating good results, why not also reap what’s possible when it comes to energy issues. This would save energy, CO2 and improve the bottom line. »One way will be to take our own medicine to ensure that Danfoss technologies and products are utilised as optimally as possible,« says head of Danfoss Business System, Bendt Jørgensen. He points to the fact that an increased use of products such as frequency converters could save a huge amount of electricity. And also that analyses conducted by Danfoss Solutions – which has made a business out of guaranteeing savings within energy and resource consumption in a number of process industries – reveal, among other things, that 50-80 per cent of the energy consumption of a range of the most energy-consuming Danfoss plants does not depend on the production volume. In other words: many machines are idling. That kind of waste should be stopped. The primary target for the next three years will be to reduce the energy consumption of the plants and then to do something about the transportation of goods and people. The target is for the largest 15 plants – which total 90 per cent of Danfoss’ energy consumption – to limit their consumption by 20-25 per cent over the next three to four years. In parallel, a policy on energy-efficient buildings and a policy on the limitation of transportation emissions are in the pipeline. More renewable energy The climate strategy also prescribes that the share of energy coming from CO2 neutral sources must be increased by 25 percentage points before 2025. In 2008, the total share of CO2 neutral energy was 23 per cent. Therefore, in this context, we should get nearer a 50 per cent target, but it has not been finally decided how to reach the 25 target. All activities introduced within the first few years must be carried out within existing budgets. Corporate Environmental Manager Flemming Lynge Nielsen was the coordinator of the collection of numerous data for the proposal by the Executive Committee and he is pleased that Danfoss now has its own climate strategy. »Since its foundation 75 years ago, Danfoss has produced energy-friendly solutions and it has a strong global profile. So, it is logical that we also make an extra effort,« he says. Air traffic, the main culprit As for transportation, planes are the main culprits. The divisions transport almost all goods by lorry and ship. Just 4 per cent of the cargo goes on board planes but it represents almost three quarters of the total CO2 emission. So, there is a lot to gain, provided that the customers accept extended delivery times. And that is a rather serious hurdle. If we aim to obtain reductions, fundamentally, there is no point in asking the lorry driver to reduce the speed. The culprit is air traffic, but of course we should watch our steps with the customers who will expect the same delivery service as we have been offering up to now. Likewise, planes are also culprits when it comes to the transportation of employees. Employees took a total of 42,000 flights in 2007, of which the majority were overseas and altogether they represent nearly half the CO2 emission from flights. The refrigeratio2009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=25http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=25Help for supplier Criticism of supplier’s conditions involved Danfoss in a case concerning trade unions in China. Danfoss has committed itself to keeping good order in not just its own house, but also that of its suppliers. Therefore, Stig Arentoft, Director Purchasing, and Malene Østergård, Environmental and CSR Director, immediately took action when an employee in the Purchasing Department came across a Danish newspaper article about a sub-supplier having been saddled with a trade union case in China. The supplier, Ole Wolff Electronics, had fired six employees, but had not followed the right procedures. The company was not ready to pay compensation. When the issue came to Danfoss’ attention, Danfoss approached the supplier and an unbiased investigation performed by a consultancy was initiated, which showed that some circumstances needed to be rectified. Ole Wolff Electronics was asked to put the situation right. A subsequent visit showed that the changes had been implemented. To Malene Østergård, this case is a textbook example of the point of Global Compact, which defines the UN’s rules about labour rights and discrimination, among other things. »Danfoss’ Code of Conduct is an invariable set of rules which applies to every supplier. Ole Wolff Electronics demonstrated tremendous flexibility and willingness to straighten out the situation. We are very pleased with this, because continuous improvements are one of the vital principles of Global Compact,« she says. The company remains a Danfoss supplier and does not wish to make any further comment. The employees who were made redundant have been paid their compensation and the company has contacted the Chinese authorities for assistance in establishing a Chinese trade union. Ole Wolff Electronics’ headquarters is located in Denmark and has production sites in China, among other countries. The company supplies electronic components to a total of six Danfoss business units. By Lene Ilsøe Nielsen Facts Danfoss signed the UN Global Compact in 2002. To show that Danfoss is committed to the principles, a set of rules, called the Code of Conduct, has been defined for suppliers to comply with. The Code of Conduct rules are based on the ten Global Compact principles concerning good corporate governance and deals with issues such as labour rights, child labour, discrimination and corruption. 252009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=26http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=26Prisoners work for DEVI Text and photo: Niels Chr. Larsen The salary is not high, but he can earn enough money for the five packets of cigarettes he smokes each week and have a handful of euro notes left. And most important: it keeps him occupied while serving his sentence in the Danish state prison Møgelkær. 48-year old Sirous Karimi is one of the inmates who works for the Danfoss company DEVI. He has the job of packaging sets of assembly equipment for floor heating installations and is quite happy with the job. It is not particularly demanding, yet he is asked to take care that every bag contains the exact number of parts. »It is good work,« he says. Over the past ten years, work for DEVI has been done inside the prison. The company is one of around 50, as estimated by prison work supervisor, Søren Elmegaard. He has responsibility for the work requested by companies and he emphasises that the work has both an educational purpose – many of the inmates have never had a real job – and a steadying effect. »A blacksmith who is imprisoned on grounds of violence should have something to do and something to get up for. We can see that during holidays, when the workshops are closed, there is more unrest.« Sirous Karimi is serving a ten-month sentence for possession of 21 grammes of cocaine, among other things All prison work is controlled by the Danish Board of Supervisors which consists of labour and management. This is to make sure that the work is not anticompetitive. Part of the inmates’ salary is paid by DEVI, amounting to the Danish minimum wage. This is around half the price of one salary hour paid at the plant in Vejle, including social grants, pension etc. On the other hand, productivity is not so high either. The prison does not accept piecework – out of regard for the weaker prisoners. »We help by offering light work tasks without any strict demands about lean work principles and in return we have a competitive price. Alternatively, we would outsource the work to Poland,« says Ebbe Knudsen, who is head of Danfoss Heating Solutions, which DEVI belongs to. Sirous Karimi expects to be released on parole in August. And when asked if he will have time to put money by? »I do not know, though I do have some left each week.« Facts All prisoners have a duty to pursue an occupation, either in the form of employment or training. They are paid a basic weekly amount of 60 euros and an additional maximum of 2 euros an hour. The amounts are tax-free. They are asked to pay for food, laundry and other necessities. 262009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=27http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=27Notes Stickers instead of stamps Until recently, the employees at the Sales Shipping warehouse in Mexico stamped a ’v’ on every compressor that was distributed to customers. The stamping cost a lot of work because it meant repainting part of the compressors. And no-one had the real answer as to why the compressors were stamped. In connection with a DPP project, a working group began to take a closer look at the matter. Investigations revealed that the stamping had been introduced to avoid parallel import of compressors without involving the authorised Danfoss agents. The compressors are produced in Slovakia and distributed to Mexico for packaging and then delivered to customers in the region. However, the compressors were in fact also identifiable through a sticker which was already applied. Now the stamping has stopped – and it has helped to produce the result that RA Mexico has improved its delivery capability from 50 to almost 100 per cent. Bitten Clausen on film Extracts from the book Bitten Clausen, which was published last year in Danish, have been made into a film that can be seen on Danfoss TV. The film lasts 40 minutes and is available on Danfoss’ Intranet in the Danish original version with English subtitles. It is also possible to produce DVDs with subtitles in other languages. To do this we need an employee in the relevant country to translate the texts from English. Racing in the streets of Buenos Aires Pablo Alonso is passionate about old cars and he enjoys a challenge at high speed. In September last year he took part in a race that ran almost 100 kilometres through the streets of Buenos Aires and into the environs of the city on dusty gravel roads. At some points along the way his speed reached 80 km/h, but this was only for short periods so as not to jeopardise safety. Twice, in 2006 and 2007, Alonso won the Class C category. His co-driver is his brother, Gabriel. His old DKW model 1000 from 1962 is sponsored by Danfoss and was manufactured in Argentina, when Auto Union (Audi, DKW, Horch and Wanderer) manufactured cars for a while in South America. Pablo Alonso works at RA Marketing in Argentina. Help for new toilet In mid-January Li Ying from Danfoss China handed over almost 1,300 euros on behalf of his colleagues to the children’s home Sun Village in the Tianjin area where Danfoss has several production sites. The money will be spent on completing some new toilets. The home was built seven years ago thanks to the initiative of Wang Aili, who funded construction out of her own savings. Today 18 children and youngsters, aged between four and 17, live with her. They have one thing in common: their parents are in prison. Wang Aili provides them with food, clothes, a roof over their heads and the care they need. While Li Ying paid them a visit, a little boy was hospitalised with a high fever. Li Ying paid the bill and was thanked warmly by his two siblings who also stay at the home. 272009-04-17T09:18:40+02:00http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=28http://danfoss.ipapercms.dk/Danfoss/Newsletters/GlobalDanfoss/UK/2009/GlobalDanfossNo22009/?Page=28Danfoss around the world India Poland Polish colleagues compose poems about Danfoss Michał Skrzyński, a mechanic-automatician (Laboratory), won the first prize of an HP 500 laptop computer in the competition run by the Polish employee magazine arranged to mark both Danfoss’ 75th anniversary and the company’s ten years in Grodzisk Mazowiecki, just outside Warsaw. Michał wrote about Danfoss in the style of Danish fairy tales. Among the other entries was one from a young female production employee who describes a dream where she is the President of the factory for one day. Another employee describes how his big dream about joining a course at MIT is fulfilled. The entries were described by the judges as being deep, funny, reflective and ingenious. In the photo, Michał is flanked by Paweł Durka (left) and Jarosław Prędkiewicz. Indian prize for VLT® HVAC Drive Danfoss’ VLT® HVAC Drive was awarded with the prize »Special Jury Commendation« in the category product design at the fourth BryAir Awards Excellence in HVAC&R, 2008-09 in India. The distinction was presented to Danfoss during COMFEX-2009 at the beginning of January, which is an exhibition for air-conditioning, refrigeration, ventilation and construction services. Josh S. Paikada, senior manager – marketing, HVAC-R, at Danfoss in India received the prize which was presented by Mrs Anu Aga, the former board member and President of Thermax Limited, with Dr. PC Jain, the chairman of Indian Green Building Council and Spectral Consultants Pvt. Ltd., the leading consultancy organisation in India, in attendance. Lithuania Help for disabled children The Fabrikant Mads Clausen Foundation was the main sponsor of last year’s Christmas bazaar in the Lithuanian capital, Vilnius. It opted to hand over the main part of the sponsorship to Atgajos Mokykla, a school for disabled children. Currently 94 children, aged between seven and 21, attend the school, of which 30 are paralysed. Others suffer from autism, blindness, speech disorders or mental disability. In addition to the usual lessons, the school offers physiotherapy, support from neurologists and orthopaedists and, after school has ended, they are offered training in computer and music. The donation will be spent on a treadmill, equipment for sensory stimuli, computers and an interactive screen. China Danfoss among fastest growing companies in China The Chinese business magazine Business Watch has selected Danfoss as one of the ten fastest growing companies in China in 2008. The list was prepared in cooperation with the Beijing University and other influential institutions. This is the third year that Business Watch has drawn up the ranking list and the first time that Danfoss has been included in the top ten. 282009-04-17T09:18:40+02:00