German car parts supplier ZF has reached a deal with unions and employee representatives to eliminate an additional 7,600 jobs. The cut is part of a restructuring push at its largest business unit. After Bosch announced similar measures, the strains on the automotive supplier industry are mounting.
The job-cutting plan from ZF affects Division E, which is the group’s electrified powertrain technology arm and is responsible for 30% of the company’s revenue. A quarter of its workforce will be shed by 2030. Management insists that the shake-up is necessary to generate savings of more than 500 million euros by 2027 and to keep the division within the company, following months of speculation over a potential spin-off.
First day on the job
For ZF’s new Chief Executive, Mathias Miedreich, who previously served as the CEO of Belgian materials specialist Umicore, the announcement was made during his first day in office. He told reporters the group was struggling with “excess capacity” and weak demand across its powertrain businesses. Subsequently, drastic measures are required to secure its place in an industry under pressure from slow electric vehicle sales, rising costs, and intensifying competition from China.
Miedreich said, “The path forward will involve painful cuts for our workforce,” and added that ZF’s ambition remains to strengthen its technological leadership rather than retreat from the market altogether.
Voluntary departure schemes
Union IG Metall and the company’s works council have endorsed the package after weeks of negotiations. While the scale of job losses is significant, ZF wants to avoid compulsory redundancies.
Instead, the company will rely on voluntary departure schemes, early retirement, severance payments, and retraining programmes. Working hours at German sites are to be temporarily reduced by about 7%, while wage increases will be frozen to free up cash.
The decision marks a reprieve for Division E, which supplies gearboxes and electrification systems for passenger cars. Previous plans investigated a partial separation of the unit, but management now pledges to retain it as an integral part of the group.
Future investment will focus on technologies where ZF believes it has a competitive edge, such as hybrid transmissions and advanced thermal management systems. Several development projects, including onboard chargers and electric axles, will be wound down.
The restructuring forms part of a broader programme announced last year that targets between 11,000 and 14,000 job cuts in Germany by 2028. The announced 7,600 reductions will contribute to that figure.
Joining Bosch
ZF is far from being the only one to retrench. Bosch, the world’s largest automotive supplier, said last week it would axe 13,000 jobs in its vehicle division by 2030, while rival suppliers Continental and Schaeffler have also pared back their workforces.
According to consultancy EY, nearly 250,000 industrial jobs have been lost in Germany since 2019, primarily in the automotive industry. The sector, once the powerhouse of Europe’s largest economy, is increasingly squeezed by slowing global sales, American tariffs, higher energy and labour costs, and the rapid advance of Chinese manufacturers in electric drivetrains.
