Parts Maker Schaeffler to Cut 4,700 Jobs on Auto Woes
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Schaeffler AG will cut about 4,700 jobs in Europe and close two sites as a deepening slump at Volkswagen AG and other German carmakers ripples through their supply chains.
About 2,800 of the job losses will happen across 10 locations in Germany as part of a plan to save about 290 million euros ($316 million) per year by the end of 2029, the company said Nov. 5.
Some positions will be relocated, lowering the overall net reductions to 3,700, or roughly 3.1% of the company’s workforce.
Schaeffler and other German parts makers have seen sales sag amid a downturn in the car industry that has forced Volkswagen, Mercedes-Benz and BMW to rethink the transition to electric vehicles. VW, Schaeffler’s biggest customer, is laying out its own cost-savings proposals to shore up its finances as weaker sales in China and Europe persist.
Schaeffler’s shares declined as much as 3.9% in early trading and are down roughly 20% this year.
READ MORE: Schaeffler Pushes Toward Class 8 With Electric Drivetrain
Peers have also been sounding alarms. Robert Bosch GmbH last week warned that it won’t achieve its financial targets this year, and ZF Friedrichshafen AG lowered its annual guidance in September and plans to cut as many as 14,000 positions by 2028. Continental AG is planning to spin off its struggling car parts unit.
Schaeffler’s adjusted earnings before interest and tax plummeted 45% to €187 million in the third quarter. The manufacturer confirmed on Nov. 5 its margin forecast for the full year of 5% to 8%.
The breadth of problems underscores the German government’s uphill battle to revive growth in Europe’s biggest economy. Even beyond cars, key industrial sectors are wrestling with weak demand, high energy costs and bloated bureaucracy, which the government has pledged to reduce. Chancellor Olaf Scholz is expected to hold more meetings in Berlin on Tuesday to resolve the government’s latest internal disputes ahead of a closely-watched meeting with key coalition members scheduled for Nov. 6.
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As the government debates potential support measures, car companies and their suppliers are continue to reel from a drop in demand and intensifying competition from China that has cut into their share of the world’s biggest EV market.
VW last week shared proposals with workers to reduce costs — including a 10% pay cut — that would potentially avoid unprecedented plant closures in Germany. The carmaker reported its least profitable quarter in years for the three months through September.
Schaeffler aims to get a boost in the shift to EVs through its €3.6 billion acquisition of Vitesco Technologies Group AG, which specializes in components for hybrid vehicles and has a strong presence in the EV supply chain. With the merger, which was completed in October, Schaeffler increased sales in its e-mobility business across regions.
