NIBE produces a number of heat pumps for the European market, including its propane-based S2125. (Source: NIBE)
NIBE's propane-based S2125 heat pump. (Source: NIBE)

NIBE to Cut 340 Jobs in Sweden as European Heat Pump Sales Decline

Heat pump sales decreased 5% in 14 European countries in 2023, according to the European Heat Pump Association.

NIBE Group, the parent company of heat pump manufacturer NIBE, has announced it will lay off 340 employees in Sweden due to “much weaker demand” in the European heat pump market.

The slow start to 2024 follows a “clear decline” in the market in the second half of 2023, according to the group’s year-end report.

With an outsized inventory of heat pumps, the company hopes to align itself with the “current lower sales volumes” by reducing staff and overhead costs, particularly within its Climate Solutions division in Europe.

“This certainly is an extremely difficult decision to downsize and terminate the employment of loyal employees,” said Gerteric Lindquist, CEO and Managing Director of NIBE. “But it has become necessary due to the tough market conditions.”

Of the planned layoffs, 264 will take place at NIBE, whose product portfolio includes the award-winning propane (R290)-based S2125 heat pump. Another 40 employees will be made redundant at CTC, a Swedish manufacturer of propane- and HFC-based heat pumps. According to CTC’s website, the company was acquired by NIBE in 2017 and has around 250 employees.

A similar reduction in staffing levels will take place across the rest of NIBE Group’s European operations, the company added. Globally, NIBE Group employs some 21,000 people.

Political support needed

As noted in the group’s year-end report, NIBE attributes the difficult market conditions in Europe to a lack of clarity around future heat pump subsidy programs in a number of countries, as well as “a deteriorating economy, lower housing output and rising interest rates.”

Conversely, in the U.S., “political decision-making has resulted in a robust, long-term incentive program for transition to fossil-free climate control,” NIBE Group explained.

To stimulate heat pump demand in the U.S., the 2022 Inflation Reduction Act (IRA) is delivering a range of tax incentives and rebates for households that opt for energy-efficient heating, cooling and hot water systems like heat pumps. On the supply side, the same law is supporting heat pump manufacturers, with more than $230 million (€214 million) in funding to accelerate domestic production of heat pump systems and components.

According to the European Heat Pump Association (EHPA), heat pump sales in 14 European countries decreased by around 5% in 2023 compared to 2022, reversing the trend of the last decade.

The slowing market has caused a number of manufacturers to announce job cuts or adjustments over the past six months, including Daikin and Vaillant. Analysis conducted by the EPHA indicates the changes announced to date will affect nearly 3,000 employees, predominantly across , Belgium, France and Germany

NIBE has said that downsizing will enable it to “establish the best possible foundations” during market uncertainty.

“We have long been convinced of the future growth potential to be found in the transition to a fossil-free society and reduced carbon dioxide emissions, and we are particularly well positioned in this market,” said Lindquist. “We are committed to navigating the downturn in the best possible way so that we will be in an appropriately strong position once the market picks up again.”

To stimulate the demand for heat pumps in Europe, stable policy support and gas-competitive electricity prices are needed, explained the EHPA.

“We are committed to navigating the downturn in the best possible way so that we will be in an appropriately strong position once the market picks up again.”

Gerteric Lindquist, NIBE

For example, a recently-approved €350 million ($379 million) aid scheme in Portugal will provide grants to heat pump producers and companies that are manufacturing equipment necessary to transition to a net-zero economy.

However, demand-side stimulation is also needed to ensure strong market growth, and many European countries are offering some form of grant or financial support to boost heat pump installations.

In the U.K., the government recently increased the subsidy available for heat pumps by 50% under its Boiler Upgrade Scheme. France’s MaPrimeRénov scheme, which helps cover the costs of installing heat pumps among other upgrades, has been revamped in recent months to make it simpler after applications dropped by 40%.

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