Automotive supplier Schaeffler to cut 4700 jobs mostly in Europe

Another indicator of the automotive industry’s struggle was that German automotive supplier Schaeffler announced plans to cut 4,700 jobs across Europe. The layoffs, primarily targeting ten sites in Germany and five additional European locations, will unfold between 2025 and 2027, with two site closures also confirmed.

Schaeffler joins the ranks of automotive companies turning to drastic measures to keep their business competitive in times of headwinds. “This is our response to tough market conditions, intensifying global competition, and the ongoing transformation within the automotive supply sector,” Schaeffler stated.

Known for its ball bearings and components integral to vehicle manufacturing, Schaeffler is repositioning itself to hedge its operations against financial risks while aligning with the sector’s shift towards electric mobility. Schaeffler’s biggest customer is the Volkswagen Group, which also announced plans to cut workforce and reduce wages by 10%.

Schaeffler CEO Klaus Rosenfeld attributes the move to the same reasons as Volkswagen: an increasingly challenging market environment, but mainly the ongoing transformation of the automotive industry.

He called the job cuts “absolutely necessary” even though earnings during the last quarter of his company “fell within expectations.” Nonetheless, earnings fell almost 45% in a year-on-year comparison for Schaeffler.

“Growing markets are outside Europe”

Schaeffler’s announcement comes just a year after its merger with Vitesco Technologies was announced, a powertrain supplier and former division of Continental. The merger, which was completed last month, expanded Schaeffler’s focus on electric vehicle components and systems, but the company had already warned that the integration would likely result in workforce reductions.

Rosenfeld told CNBC: “The world looked quite different at that time” and added, “For the automotive business, we make adjustments particularly in Europe (because) the growing markets are outside Europe.”

Schaeffler’s restructuring is expected to affect around 3% of its combined workforce, now numbering 120,000 employees across 100 sites globally. With the goal of reducing costs by €290 million per year by the end of 2029, Schaeffler’s restructuring plan reflects broader pressures within the sector, where weak demand, particularly in Europe and China, has led to similar moves by other suppliers. The company expects the efficiency measures to incur an initial cost of €580 million.

A wave of restructuring measures

Schaeffler’s decision follows a wave of restructuring measures across the automotive supply chain. Leading suppliers like Bosch, ZF, Continental, and Valeo have similarly announced cost-cutting plans as they grapple with customers’ declining car sales and seek to lower their costs by increasing the pressure on their suppliers.

Earlier this week, the European Association of Automotive Suppliers (CLEPA) issued a stark warning, citing the significant reduction in European vehicle demand and the slow pace of electrification as ongoing threats to the sector’s stability.

CLEPA’s Secretary General, Benjamin Krieger, described this period as “the most challenging in recent memory,” further noting that the financial crisis of 2009 was followed by a quicker rebound in comparison.

According to CLEPA, automotive suppliers have announced around 32,000 job cuts across Europe in the first half of 2024 alone, surpassing layoffs recorded during the COVID-19 pandemic. Since 2020, over 86,000 jobs have been eliminated in the European automotive supply sector.