The French-German Automotive supplier Forvia plans to cut up to 10,000 jobs in Europe by 2028. That should improve the company’s competitiveness, Forvia says, and generate half a billion euros in yearly savings. Although the company, formed from the merger of Nanterre-based Faurecia and German Hella, has returned to profitability, it continues to carry heavy debts.

Forvia operates in several European countries with over 75,000 employees across 133 plants in France, Germany, Poland, the Czech Republic, and Spain. Forvia’s products include lighting, exhaust systems, and parts for dashboards for cars, among others.

Before the merger with parts manufacturer Hella, Faurecia was the world’s 7th largest international automotive parts manufacturer and the number one for vehicle interiors and emission control technology. The merger strengthened its position, so one in two vehicles worldwide is equipped with Forvia products.

‘Dark plants’ without human operators

But now Forvia believes it has an excess capacity of up to 20% in Europe, where the market is sluggish, and it wants to target more China. All sites will be affected by the cost-cutting plan, “but not in the same way,” said the company’s chief financial officer, Olivier Durand.

Thanks to AI, the group aims to halve its R&D and production costs by 2028, including setting up so-called ‘dark plants’, factories without operators.

Strong ties with China

While Europe remains Forvia’s biggest market, it also wants to increase its focus on Asia. The company is experiencing strong growth there. It generates a little less than a third of its turnover there but 57% of its operating profit, particularly in China, where it partners with brands such as BYD, Li Auto, Chery, and Leapmotor.

CEO Patrick Koller recalled that in China, 20 manufacturers carry out 90% of automobile production. “We are the supplier of 19 of them. We have strong ties and support their international projects, and we will happily supply the BYD factory in Hungary and others.”

Last year, Forvia also started Symbio, EU’s biggest fuel cell gigafactory, and a joint venture between the Forvia Group, French tire giant Michelin, and car manufacturing group Stellantis. Forvia is also a significant supplier for Stellantis, Volkswagen, Tesla, and Ford.

Heavy debt burden

Forvia posted a net profit of 222 million euros for a turnover of 27,2 billion euros last year, up 10% from 2022. But Forvia also carries a heavy debt burden of 7 billion euros, mainly due to its acquisition of Hella, which was primarily financed by loans.

Automotive suppliers, too, have made hefty investments in the shift to electric, and now they are seeing their markets being hit due to slower uptake than expected. Continental, Bosch, and ZF Friedrichshafen also have announced heavy staff reductions.

Investors are pleased with the Forvia plan: on the stock exchange, Forvia went up more than 4,5% after the announcement. Among trade unions, it is a different story. The announcement provoked indignation among trade union organizations who learned of the news in the press. They should quickly call for extraordinary social and economic councils to discover more.