Schaeffler will cut nearly 3,500 jobs
The automotive parts supplier Schaeffler plans to cut around 2,660 jobs in Germany and another approximately 800 jobs across the rest of Europe. This measure is part of a “performance improvement program” through which Schaeffler aims to save around 300 million euros annually. The cost-cutting measures are also related to electric mobility.
Image: Schaeffler
Schaeffler is responding to the crisis in Europe’s automotive industry through these measures. Specifically, the company cites a declining market trend and increasing competition due to weaker demand for internal combustion engine vehicles and a delayed rollout of electric mobility. According to Schaeffler, abnormally high labor costs per employee in Germany, along with the high complexity of the organization due to too many management levels and narrow span of control, also contribute to the issues.
In other words, Schaeffler has not yet made any money from e-mobility; in fact, the company’s related division reported a negative EBIT margin of 14.8 percent for the first nine months of the year, with losses amounting to 571 million euros under EBIT accounting. In the field of electric vehicle components, Schaeffler is experiencing declines among European automakers in the Chinese market, which is affecting the company. Nevertheless, Schaeffler is indeed highly committed to the development of electromobility, as shown in our video report from the Schaeffler Automotive Symposium in Bühlaus this summer.
Let’s now look at the planned workforce reductions: Approximately 50 percent affect production, 30 percent the research and development sector, and 20 percent other functional areas. A total of 16 locations in Europe are impacted by these cuts. Five locations, four of which are in Germany, are set to be closed in the future.
Closure of locations including those in Berlin and Dortmund
This includes the plant in Dortmund, which currently employs 430 people, and the Morbach site with 160 employees. Both are part of the Powertrain & Chassis division and manufacture products for internal combustion engines. Schaeffler also plans to shut down operations at its Berlin site, which has around 270 employees, and close the Schwalbach site. A large portion of the approximately 385 employees at Schwalbach are set to transfer to Schaeffler’s facility in Frankfurt. In total, around 190 jobs are affected by these closures.
Furthermore, Schaeffler intends to cease toolmaking activities at its Höchstadt site and make adjustments to special machinery production at the Erlangen and Schweinfurt sites. Additional job cuts are planned at German locations such as Herzogenaurach, Bühl, Höchstadt, Nuremberg, and Regensburg.
The planned reduction of 2,660 jobs in Germany means a cut of around nine percent of the currently just under 32,000 jobs in the country. However, if the job cuts resulting from earlier cost-saving programs and the 1,800 part-time retirement agreements already signed are included, the percentage rises to about 18 percent.
Reduce organizational complexity
Schaeffler also intends to restructure its management: at least two of the current seven hierarchical levels below the board of directors are set to be eliminated, according to the “Handelsblatt.” While Schaeffler does not provide a specific figure, it states in its press release that it aims to “reduce the complexity of the organization.” Earlier that spring, the supervisory board had already decided to reduce the board of directors to eight members by merging the responsibilities of research and development with those of production, supply chain management, and procurement.
In addition to developing its core business as an automotive supplier, Schaeffler also sees promising growth opportunities in emerging fields, particularly in humanoid robotics and defense. “We can draw on the technical expertise we have developed in our core business,” says Production Director Jochen Schröder.