The Board of Management of Schaeffler AG has decided on structural measures with a regional focus on Germany and Europe to increase the company's long-term competitiveness. In this way, the company is responding to the challenging market environment, the increasing intensity of global competition and the ongoing transformation, particularly in the automotive supply business.
The programme of measures includes three strands of activities:
- (1) Improvement of revenue in bearings and industrial solutions
- (2) Realisation of synergies from the merger with Vitesco
- (3) Capacity adjustments due to the ongoing transformation of the automotive supply industry.
- A gross reduction of approximately 4,700 jobs in Europe, of which approximately 2,800 in Germany; the relocation of workers reduces the net reduction of jobs in Europe to 3,700.
- The reductions primarily affect ten plants in Germany, five other plants in Europe, including the closure of two plants
- Expected savings potential of approximately €290 million per year to be realised by the end of 2029; one-off expenditure expected to be approximately €580 million
- Measures to be implemented in a socially responsible manner on the basis of the 2018 forward-looking agreement
- Long-term improvement of competitiveness as the main objective
Structural measures are basically focused on three lines of action. The first is aimed at achieving the necessary improvement in earnings in the Bearings and Industrial Solutions division, which is facing a persistently weak economy, structural problems and increased competition.
The second line of action concerns the previously announced realisation of synergies from the merger with Vitesco Technologies Group AG ('Vitesco'), which will be achieved mainly through synergies in sales and purchasing, but also to some extent through a reduction in the number of employees.
The third area of activity involves measures resulting from the ongoing transformation of the automotive supplier industry. This includes measures in the context of declining volumes in combustion technology and the current weakening of new electric drive programmes in Europe. As a result, measures affect both the Powertrain & Chassis Division and the E-Mobility Division.
A gross reduction of 4,700 jobs in Europe
The measures foresee a gross reduction of around 4,700 jobs, of which around 2,800 in Germany. The relocation will reduce the net reduction to approximately 3,700 jobs. This corresponds to approximately 3.1 % of the total number of employees after the merger, increasing by approximately 35,000 to approximately 120,000 employees as of October 2024.
The redundancy measures concern ten sites in Germany. Five other locations in Europe are also affected, two of which will be closed. Further information on these locations will be announced before the end of the year. Most of the measures are to be implemented between 2025 and 2027.
Potential savings of approximately €290 million per year by 2029.
The measures will lead to potential annual savings of approximately €290 million from 2029 onwards. Approximately €75 million of this amount is attributable to cost synergies arising from the merger with Vitesco, which are included in the target amount of €600 million per annum given when the transaction was announced. The implementation of the measures announced today will require one-off expenses totalling approximately EUR 580 million, which mainly include provisions and relocation costs.
The measures agreed in connection with the programmes already announced by Vitesco and Schaeffler will continue to be implemented as planned.
Klaus Rosenfeld, CEO of Schaeffler AG, said: "The measures announced today address three things: We are getting our bearings and industrial business back on track. Secondly, we are realising the cost synergies from the merger with Vitesco Technologies. And third, we are continuing the transformation of our Powertrain & Chassis and E-Mobility divisions. This program is essential in the current environment to ensure the Schaeffler Group's long-term competitiveness. We will implement it in a socially responsible manner and with a sense of proportion."
Bearings and Industrial Solutions Division adjusts capacity
In the Bearings & Industrial Solutions division, measures have already been taken in recent months to counteract the continuing decline in demand. In addition to the reduction of flexible working hours, reduced working hours and reduced weekly working hours in some areas, measures have been initiated and intensified to promote sales and reduce external service and maintenance costs. This combination of measures is no longer sufficient given the continuing difficult market situation.
"Particularly in Europe, demand is consistently weak in many sectors, leading to overcapacity in German and European plants. For this reason, structural adjustments are necessary to optimise our cost base, consolidate operations and permanently improve the company's competitiveness. In addition to capacity adjustments, this requires further localisations, which we will discuss in close cooperation with our employees." He said Sascha Zaps, CEO of Bearings & Industrial Solutions.
The Schweinfurt and Homburg sites are particularly affected by consolidation activities, capacity adjustments and relocation of production, as well as job cuts in central administration.
The Bearings and Industrial Solutions Division's Homburg plant produces components for drive systems, guideways and mechatronic system solutions in the field of linear technology. The transfer of activities in the Linear Technology Division will lead to consolidation due to the persistently weak demand in the industrial automation sector. This measure will lead to increased competitiveness and cost efficiency in the Linear Technology division. The other two production sites in Homburg are not affected by the relocation.
The main plant of the Bearings & Industrial Solutions division in Schweinfurt will also take over the production and employees of the former Ewellix plant in the port of Schweinfurt, about five kilometres away. As part of the integration of Ewellix into the Schaeffler Group, the former Ewellix plant in Taoyuan outside Europe will also be closed.
The operations of Melior Motion GmbH in Hamelin, which was acquired in 2022 and mainly produces planetary gearboxes for industrial robots, will be discontinued and a sale of the Hamelin plant is being sought.
For the Steinhagen plant, a future concept was agreed with the employee representatives to jointly develop options for the future of this plant, where Schaeffler primarily manufactures spherical plain bearings for various industrial applications.
Realisation of cost synergies from the merger with Vitesco
As part of the integration, Schaeffler and Vitesco have agreed to realize synergies of €600 million per year, to be achieved by 2029, primarily through growth and economies of scale in purchasing. As previously announced, a subordinate part of the synergies will also be realized through headcount reduction measures. This will particularly affect functional areas and central departments at the headquarters in Regensburg and Herzogenaurach as well as the R&D division.
Regensburg will be the future headquarters of the Powertrain Solutions division of Schaeffler's Powertrain & Chassis division. Schaeffler's new E-Mobility division will be based in Herzogenaurach, which will also remain the Group's headquarters.
These modifications will result in a reduction of around 600 jobs in Germany, mainly in the two locations mentioned above. The two companies will share roughly equally in these numbers.
Transformation in the Powertrain & Chassis and E-Mobility divisions
In the Powertrain & Chassis division, the ongoing transformation will require further adjustments that have been defined in recent years at both Schaeffler and Vitesco. For example, further adjustments are being made to further reduce the cost base as a result of lower demand due to the continuing downturn in the internal combustion engine business. This applies in particular to the Herzogenaurach, Schwalbach and Regensburg plants.
As part of the consistent progress of the e-mobility and portfolio management division of the former Vitesco, further measures are now planned, which were already announced before the merger. In addition, stronger growth was expected in earlier phases, especially for European OEMs, which is not currently materialising. In addition, increased competition is leading to further pressure on prices and costs and to a greater localisation of development services, especially in China. This concerns in particular the plants in Regensburg, Nuremberg and Berlin.
Socially responsible implementation as part of the future agreement
The implementation of the measures in Germany will continue to be governed by the agreement on the future concluded with IG Metall in 2018. The job reductions are to be achieved primarily through staff turnover, volunteer programmes and severance and partial retirement agreements. "We are in close dialogue with our employee representatives. Our common agreement is that the measures resulting from the future agreement will be implemented in a fair and socially responsible way. In addition, we will continue to invest in skills and training, especially at our home plants in Germany." She told Dr. Astrid Fontaine, Human Resources Director and Director of Labor Affairs at Schaeffler AG.
Schaeffler invests consistently and continuously in the training and qualification of its employees in Germany and Europe. Since 2022, approximately 40,000 employees have participated in further training and retraining courses across Europe and successfully qualified for new tasks and future technologies, of which almost 19,000 in Germany. Consistent further training is key to ensuring that as many employees as possible participate in the transformation.
"With these structural measures, we are taking an important step towards ensuring Schaeffler's competitiveness. These measures have no alternative in the current market and competitive situation. Our commitment to Germany as a place of business remains. For the sake of our customers and employees, we will continue to invest in future industries and technologies in Germany and Europe." Klaus Rosenfeld concluded.
Schaeffler/ gnews - RoZ
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