Supplier Layoffs Planned at Schaeffler, Continental as Economy Dies

Matt Posky
by Matt Posky

Germany’s Schaeffler AG will reportedly be eliminating 4,400 jobs and abandoning several facilities in its home country as the supplier confronts what it dubbed complications relating to the global pandemic. Like Continental, which is actually controlled by the same people, Schaeffler has been coping with lessened demand after automakers around the globe shut down earlier this year as a precautionary measure. While the coronavirus lockdowns can’t be faulted for every issue the companies are facing, they have been a thorn in the side of parts suppliers everywhere.

Continental announced it would need to eliminate roughly 13 percent of its workforce last week. That’s roughly 30,000 fewer jobs. Schaeffler’s restructuring plan only calls for eliminating 4,000 positions. However, it is the smaller of the two and has decided to spread its cuts out as much as possible.

Schaeffler will be freeing up jobs at facilities across Europe with a couple of sites likely to be closed or sold to other entities as a way to save money. According to Bloomberg, Georg Schaeffler and his mother Maria Elisabeth Schaeffler-Thumann (some of the suppliers’ largest shareholders) have seen one of the deepest declines in wealth among Europe’s richest families in 2020. While its hard to get misty over that when poor people also seem to be taking it on the chin with a sledgehammer, it would explain why Schaeffler Group (which includes Continental) is so interested in fixing its finances.

From Bloomberg:

Most of the reductions will take place at a dozen facilities in Germany and two sites elsewhere in Europe, the maker of engine, transmission and chassis components said in a statement Wednesday. Factories in Wuppertal, Eltmann and Clasthal-Zellerfeld will be shut or shopped to other companies, with the cuts expected to save Schaeffler as much as 300 million euros ($354 million) a year. The company will take a one-time charge of 700 million euros ($826 million) for the restructuring.

“We’re in a situation where the really bad effects of the pandemic are easing, but the levels we saw in 2019, we’re not going to reach anytime soon,” CEO Klaus Rosenfeld said in an interview, adding that a recovery might take until 2024. “It’s not going to be v-shaped.”

Schaeffler is also planning on raising $1.5 billion through new shares and offered a voluntary severance package to nearly 2,000 employees it thought might be willing to retire early. While technically still profitable, the business’ revenue has shrunk by around 20 percent through the first half of this year and has begun costing its biggest shareholders money. But this all gets fixed for suppliers the second the lockdowns end, right?

Not necessarily.

Plenty of countries plan to maintain rather aggressive restrictions through the remainder of this year. While that timeline could be shortened by demonstrations demanding governments stop enforcing unsustainable safety policies, tons of economic damage has already been done in the name of health. With unemployment already up around the world and rolling reports of how coronavirus lockdowns obliterated local economies, many are convinced a secondary round of restrictions would guarantee a prolonged economic depression. Some are even suggesting we’re already in for another recession akin to the one endured in 2008, regardless of what steps are taken now.

[Image: nitpicker/Shutterstock]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • SCE to AUX SCE to AUX on Sep 10, 2020

    "While its hard to get misty over that when poor people also seem to be taking it on the chin with a sledgehammer..." More class envy at TTAC. If the "rich guy" (defined as someone with $1 more than you) takes a hit, then so do his employees. I've never received a paycheck from a poor man, and you don't enrich the poor by impoverishing the rich. So yes, I'll shed a tear for the Schaeffler family's travails.

    • See 18 previous
    • Inside Looking Out Inside Looking Out on Sep 12, 2020

      @Arthur Dailey Nortel was taken over by Huawai and now 5G is Ericsson, Nokia and Huawai and Huawai is winning the war. American CEOs has an ability to run into ground most successful companies in Solar system and become obscenely rich in the process. They support BLM and Democrats so they are safe. And they are not afraid of Republicans either. Who does?

  • Wjtinfwb Job cuts and EV's... is that a winning strategy? You're locked in to substantial labor expense after the UAW agreement signed a few months ago. And EV's ain't exactly flying off the shelves en masse. Get the new Charger out already, it's been teased more than the Bronco and Supra were combined. Get a real Hybrid option out for the RAM trucks and big Jeeps that consumers will buy. Consider bringing back a Gen 3 Hemi with an aluminum block, direct injection and perhaps a Hybrid option to counter the Toyota debacle and get a jump on GM. Dump the Hornet and build Dodge a version of the Jeep Compass they can actually sell. A Dodge with Alfa bones isn't compelling to either brands fans. Fix the Durango's oil cooler problems to avoid alienating police departments nationwide. Do you want every cop in the US driving an Explorer? Freshen up the Pacifica and get Chrysler a cool sedan or wagon that can create a buzz like the 300 did more than a decade ago. And fix your dealers, they are by a large jackasses. Plenty of opportunity for improvement.
  • 3-On-The-Tree True that’s the worst beat down in history.
  • Jalop1991 Tesla has made getting repairs a real headache for some owners, as the automaker hasn’t allowed them to get work done at third-party shops. That policy has led owners to seek  class-action status against the company,So, move next to the airport then complain about the noise.Got it.
  • Jalop1991 One of the most interesting parts of this situation is that Stellantis, and by extension, the Chrysler Group, is increasingly considered a foreign companyNational Lampoon, May 1981.
  • ChristianWimmer This W126 example looks very nicely maintained and very clean inside and out. Definitely owned with love and respect. I can see Bill from Curious Cars selling this thing! My father drove a second hand bare bones facelifted 1985 Mercedes 300SE W126 back in the day until the early 2000s which eventually got passed down to me. The previous owner had only paid extra for a sunroof and automatic transmission. It had black cloth seats, no A/C, manual windows, no cruise control and those ugly plastic hubcaps which were so common on 1980s Mercedes’. I drove the 300SE for about seven years and enjoyed the comfort and pretty low running costs: reliable and also relatively fuel efficient. If you drove it normally you could get it to sip 9 L / 100 km. Motor oil consumption was pretty high as it got older needing a top up with 1 L of oil every 1,500-2,000 km, but this was apparently normal on the 3.0 inline-6. A comfortable long-distance cruiser and it even “handled” pretty nicely when you attempted to drive it in a 50% sporty manner on some backroads. After the free-for-all parking lot it usually parked on got demolished and parking such a huge barge became a problem, I ended up selling it to a local classic car club which still own it to this day and display it at classic car shows. Great memories of that car. 420SE/SEL and the 560SE/SEL are nice but the thirsty motors are something of a turn off.
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