Automotive supplier ZF to cut 14.000 jobs in domestic workforce

German automotive supplier ZF Friedrichshafen AG will cut 11 to 14,000 jobs from its current domestic workforce of 54,000 by 2028 “to respond to the changes in the mobility sector, particularly in electromobility.”

That will be “difficult but necessary,” ZF CEO Holger Klein said in a statement last week. In the future, its German locations will be organized more efficiently and merged into several site networks, and the main focus will be on the ‘Electrified Powertrain Technologies’ division.

ZF, one of the largest automotive suppliers in the world, was founded by Zeppelin inventor Count Ferdinand von Zeppelin in 1915. With some 168,700 employees worldwide, ZF reported sales of €46.6 billion in fiscal year 2023. The company operates 162 production locations in 31 countries.

Historically, it has been known for its gearboxes, automatic transmissions, and steering systems, among other products. Gearboxes are no longer needed in most electric vehicles. “The shift toward electromobility will also lead to a decline in the volume of transmissions for conventional and hybrid cars, and this development must also be taken into account in this context, ZF says.

Future belongs to electromobility

On the other hand, “the global market segment for passenger car drives is highly competitive and subject to strong cost pressure. This makes it difficult to cross-finance purely electric drives, which often still have low margins, with drives for conventional and hybrid vehicles,” the company adds.

“Given these factors, ZF will review and improve the workflows, processes, and structures in the Electrified Powertrain Technology division with a particular focus. Despite the current market situation, one thing is clear – the future belongs to electromobility. We have made proactive investments here and will continue to invest heavily in this area,” explained ZF CEO Klein.

Classic automotive suppliers must adapt to changing markets despite a temporary decline in demand for EVs, which is most evident in Germany and the US but less elsewhere in Europe and especially in China.

Last year, the number of ‘electrified’ cars in the world doubled to 42 million, with 23 million driving around in China, according to Geman ZSW. That’s a non-profit scientific foundation by the State of Baden-Wuurtenberg that researches and offers consulting services to promote sustainable and climate-friendly energy technologies.

Looking for partnerships

ZF’s CEO Holger Klein admits that even a giant like ZF Friedrichshafen can not do it alone. “However, the changed market perspective and high competition for electrified powertrain technologies also require openness to cooperation and strong partnerships. “In addition to our own commitment—that is, to make further progress in electric mobility—we also need to examine these options,” he adds.