By on September 10, 2020

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]

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20 Comments on “Supplier Layoffs Planned at Schaeffler, Continental as Economy Dies...”

  • avatar
    SCE to AUX

    “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.

    • 0 avatar

      Or do what Amrica did during the glory years of the ’40s, 50s and ’60s. Make the top rate of income tax 90% and redistribute the wealth to society at large. I need no lecturing on wealthy “nice people providing jobs”. They managed when taxes were high, they could manage again. Given the chance and driven by greed, they got governments elected to power that cut their taxes. Everyone else? Not so much.

      Amateur repetition of conservative slogans such as the it never works trickle-down theory put about by the rich for the last 45 years seems to have been swallowed whole by an undiscriminating public, and now gets repeated as if it were some some sainted truth. Far from it. You don’t need socialism to make a more equitable society, you just need common sense and the ability to read your own history and repeat what worked before. And the rich scream in terror!

      • 0 avatar
        Art Vandelay

        The problem with the 90 percent rate was that nobody paid it. With those high rates that looked great on paper came tons of loopholes. They managed those high rates by not paying them.

        I know the CEO (incidentally, he risked pretty much all he had to start the company) of my company and many of the C-Level folks. This myth that they are all just sponging off of their workforce and those same workers could do just as well is just that, a myth.

        could they do my job? No (well one could do it better than me, but he just sort of moved up the ladder). But that’s why they pay me. Thing is, I couldn’t do their job nor would I want to. They all put in way more hours than I do and generally work much harder at what I consider to be less satisfying work. That is why they make more than me.

        I can’t imagine that the situation at most SUCCESSFUL companies is much different. They get paid alot because it is demanding work and the livelyhood of everyone at the company depends on them doing the job well. I don’t envy them, but I do respect them and frankly, I learn from them and recognize that they are typically very smart people. You don’t get there otherwise.

        interesting that when we talk about “The Rich” the ire always seems to be directed at the business rich. Yes, they do provide jobs and most of them work their kiesters off…well those rich, those in business. Now the non business rich…those in the Entertainment or Family Dynasties or those that miracously became rich in public service…The Kennedy’s, The Bernie types, The Entertainment types. You know, the ones that may employ an inner circle but at the end of the day generate wealth by tweeting and doing the occasional film. Why do they get a pass? Cardi-B is worth 24 Million Dollars. That is more than many of these CEOs that we seem to want to tax to death that you don’t want to be lectured about. If she was taxed away, very few would notice. If you taxed away the people starting companies that then grew them into large businesses employing many would that be the case?

        • 0 avatar
          Arthur Dailey

          If anything during my career I have learned that the higher you move up the organizational chart the easier things get.

          As a CEO/partner/Senior Executive golfing, attending charitable events/banquets and even trips overseas were considered to be ‘work’.

          If you need time off for personal reasons, you don’t need to provide an explanation or get permission. And you are still paid.

          You working conditions are pristine. Usually a large office. With A/C and expensive furnishings.

          Meanwhile the lowest paid workers have someone watching over them. Need permission to take any time and are not paid for it. Often don’t have medical/dental/prescription coverage so may get sick more often. Often perform manual labour in an environment that is too hot/cold or crowded. Are exposed to workplace hazards.

          Many need to use public transit to get to and from work, during the most crowded times.

          For owner/operators of small businesses, I agree that their hours and risks are much higher and they deserve their remuneration/perks.

          However for the ‘carpetbaggers’ that we see moving from corporation to corporation as professional ‘managers’, they are grossly over compensated and quite often nearly superfluous.

          For example the many CEO’s/Senor Executives who have run GM into the ground. Or Bob Nardelli briefly the CEO at Chrysler.

          • 0 avatar

            And then there is the Peter Principle, where a person gets promoted beyond their abilities.

            Regrettably, there are a lot of living examples around, everywhere.

            However, I believe Ms Barra at GM is the ideal fit for GM at this time, in this political environment of Handouts, Bailouts and Nationalization.

            At least she is trying new approaches, where in the past her male predecessors kinda rolled over and got swamped by the deluge of negativity that was GM in those days.

            And…….she is responsive to input from the US President, fellow Americans.

            Germany? That is everyone’s guess these days.

          • 0 avatar
            Art Vandelay

            But we are not a small business @Arthur. We used to be, but because our CEO is good at his job, we grew into a midsized company. He has a very nice office which is good because he frequently uses it to meet with people that make our company grow and enlarge my retention bonus. I frequently work without AC and often follow Army units and equipment around in the field. I don’t mind…he compensates me accordingly. We don’t have a single employee that has to give any reason for personal time off…if you have no vacation time or sick time it is unpaid though but they provide long term disability should something bad happen.

            Yes, there are companies that bring in some of those “hired gun” type managers. They typically go bankrupt unless they are “too big to fail” though but most people in those roles in my experience again, work their tails off. The biggest entity I have been at and interacted with people at that level was Lowe’s Home Improvement. Not GM sized, but a Fortune 50 Company. They worked more hours than I did. CEO’s typically came up in the company so I don’t share your experiences.

            I do share your view of Nardelli and GM management of late (Ford seems to do 2 bad ones and then bring in a miracle worker…a frustrating cycle for fans of their product).

            My CEO I am sure does a golf tournement from time to time…what do I care? The company is growing and it is a result of both his actions AND the competent workforce he has. We all do our job. It isn’t adversarial. That is the case most places I’ve been with the exception of my time as a teacher (toxic) and the military because it just sort of is what it is.

            Bad CEO’s, sure? But I don’t think the situation you describe is the majority.

          • 0 avatar
            Arthur Dailey

            @ArtV: I am glad that you mentioned Lowes because of course Nardelli was CEO of the Home Depot prior to being ousted. Bernie Marcus and Arthur Blank who started it were model executives. They brought Nardelli in from GE and eventually he faced a mutiny among shareholders and staff. Yet he still got re-hired as a CEO, at Chrysler.

            We have seen this often in the retail sector, particularly in Canada. The same executive team running a company into insolvency and then getting rehired elsewhere.

            And like Nardelli almost always able to collect their bonuses.

            Nortel was a Canadian success story for decades. Eventually run into bankruptcy. Yet while it was going down, a senior executive was building a custom mansion/estate on the shores of Lake Ontario. The same executives who helped ‘mismanage’ this company received ‘retention bonuses’ for staying around to close the door and turn off the lights.

            Unfortunately the pension was underfunded to the tune of $1.5 billion.

            Meanwhile after all the assets were liquidated it was discovered that the assets including patents, more than offset the corporate debts.

        • 0 avatar

          “Cardi-B is worth 24 Million Dollars. That is more than many of these CEOs that we seem to want to tax to death that you don’t want to be lectured about”

          Those executives we want to tax to death are getting that much in a year. A friend of mine got $60 million in a year. I have neighbors that have had $20 million+ bonuses. I travel in those circles. You know how those people party? Try things like hiring Lenny Kravitz to play your company Christmas Party. How about hiring Paul McCartney for a birthday party with James Cordon as the MC. One friend even hired Elton John for his anniversary party. Granted, these people do give away craploads of money to charities, but they are still bringing in unimaginable loads of cash in pay. BTW, I was at every one of those parties :^) so it’s first-hand information.

          Here are some CEO salaries:

    • 0 avatar
      Arthur Dailey

      And your pay cheque was probably made possible by the spending of the ‘working and middle’ classes, not by the rich.

      Any era that witnessed great income inequality/disparity was inevitably followed by a depression/recession or social unrest.

      • 0 avatar

        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?

    • 0 avatar

      “you don’t enrich the poor by impoverishing the rich”

      No you do. It was done successfully in Soviet Union throughout the most part of XX century. Or in China.

    • 0 avatar

      Keep in mind that this is happening, or will be happening in Germany. Their economic system is a wee bit different than that of America, Mexico and Canada.

      There are no poor people in Germany! Most of Western Europe will insure that all of their population is provided for, and taken care of.

      If you want to see poor people, look around the US in cities where poor people urinate, defecate and live on the street, go through trash cans or look for a handout for food and nourishment. We’ve all seen it on TV in America.

      The people losing their jobs at Schaeffler, Continental, are only losing their jobs, not their housing, not their income, not their food.

      In all cases they will be better off than the homeless in America.

      • 0 avatar
        Art Vandelay

        Do you get over there very often @HDC? There are plenty of homeless people in the large Western European cities. If you need to catch an early flight out of Paris you will nearly trip over them around pretty much any Metro station. It isn’t LA, but you don’t have to look hard to see them.

        • 0 avatar

          Art, the last time we were there was 2016, and we stayed in Europe for ~6 months, spending time in Germany, Portugal, Holland, Italy and assorted two – three day trips elsewhere, driving our long-term rental minivan.

          I must have missed what you are referring to. We did see some panhandlers, but they were far from unkempt or destitute.

          We’ll be going to Israel for ~6 months as soon as the China-virus is defeated and I will be taking snapshots/pics of a lot of things while there.

          I did take some pics with my wife’s phone in San Diego (Balboa Park) and other places we visited since 2016 in the US, to show how bad the homeless and druggie situation is. I even got pics of turds on the sidewalk, and hypos in the street by the curb.

          Truly disgusting to see these things.

          • 0 avatar
            Art Vandelay

            It has gotten way worse. I believe my wife and I first noticed it in 2016 or 17 on a trip through Belgium and France. The last time she had been there was the late 90’s. She noticed it in Paris right away.

            It was always in Italy. I lived there for 4 years. You saw it less in the touristy spots but Naples?! Everywhere and if you think US cities are dirty give that place a look. We don’t really have any place that rivals it. Haven’t seen it really get any better or worse in 20+ years though.

            London wasn’t so bad as the rest of Europe, but I get there less.

            I will say, I assume many of them were a result of the middle Eastern migrant crisis., but the streets were much worse than when I started going there.

            And turds on the street in San Diego? I assume you missed Paris in your travels. I will say that is the only stereotype I find true about that place though…The French are warm and nice. I think the people that say otherwise haven’t actually been.

          • 0 avatar

            ” I assume you missed Paris in your travels.”

            Yes, we did. Zero interest.

            Drove from the Ramstein AB area to Zeist, the Netherlands, by way of Arnhem.

            Stayed a couple of days in Zeist and Den Dolder, then South through Belgium, France and Spain, directly to my dad’s ancestral home in Portugal, where I still have family today.

            So, it’s been a few years ago I was in Europe and we spent the time since with extended stays in Vancouver, BC, Canada, and Ensenada, Baja California, Old Mexico, where we share property with three of my brothers.

            Once we sell our house in the desert, and after the China-virus is defeated, we’ll hit the travel circuit again.

            We mailed off six boxes of old clothing to Israel yesterday for our anticipated stay with my sister and her (Jewish) husband there, at a small Kibbutz outside of Tel Aviv.

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