Continental to slash 3,000 jobs more amid industry downturn

German automotive supplier Continental announced plans to cut 3,000 jobs more worldwide by the end of 2026. The move, which follows a previous round of 7,150 job cuts announced last year, comes as the industry grapples with weakening demand and structural shifts toward electrification.

According to the company’s statement, nearly half of the affected positions will be in Germany. The latest job reductions will primarily impact the research and development department, with the company aiming to shrink its global R&D workforce by 10% to maintain competitiveness.

Five plant closures

The updated decision follows the company’s recent announcement of four plant closures in Germany, which could put 580 jobs at risk. These cuts add to the ongoing restructuring efforts, including Continental’s strategy to streamline operations and focus on higher-margin segments, such as tires and industrial solutions.

Continental stated that it intends to implement these reductions “to a large extent” through early retirement packages and hiring freezes. “The current market environment remains challenging as the industry undergoes a major transformation toward future technologies,” the company said in a statement.

The automotive sector has been under pressure for months due to declining vehicle demand, rising energy costs, and increasing competition from Chinese manufacturers. European automakers have scaled back production, leading to a sharp drop in orders for suppliers such as Continental.

Broader industry impact

Continental is not alone in its struggle. Other German auto parts suppliers have announced similar cost-cutting measures in recent months. Bosch, Schaeffler, and ZF have all disclosed job cuts, with Bosch eliminating 7,000 positions and Schaeffler axing 4,700 roles. ZF, meanwhile, plans to reduce up to 14,000 jobs, citing the need for greater efficiency.

The crisis extends beyond Germany. French automotive suppliers, including Michelin and Walor, have also announced layoffs and plant closures. Michelin recently revealed plans to shut down two factories in France by 2026, affecting 1,254 workers.

Meanwhile, Walor, a manufacturer of engine components, has placed two of its plants under financial protection as demand for internal combustion engine parts dwindles amid the shift to electric vehicles.

Undermining long-term competitiveness?

Continental’s restructuring efforts include a planned spin-off of its underperforming automotive division, which produces electronic components, sensors, and braking systems. The company aims to list this division on the stock market by late 2025, allowing it to focus on its more profitable segments.

German labor unions and worker representatives have voiced concerns over the cuts, warning that deep reductions in R&D could weaken the company’s long-term innovation capabilities. “Job cuts and cost reductions at any price are not a sustainable strategy for the future,” said Michael Iglhaut, head of Continental’s General Works Council.

With 32,000 job cuts announced across the European auto supply industry in the first half of 2024, the sector faces its most severe employment crisis since the Covid-19 pandemic. Local governments are urging the European Commission to support these struggling suppliers financially.