If the big manufacturers like VW wobble, it is also a problem for the suppliers. Schaeffler wants to cut thousands of jobs – and that is unlikely to be the end of it for a long time.
The emergency in the automotive industry is spreading further: Following the crisis reports from Volkswagen, the automotive supplier Schaeffler has now announced that it will cut several thousand jobs.
“If you delay structural adjustments – you see this with others – you are later forced to take radical measures,” Schaeffler CEO Klaus Rosenfeld told the German Press Agency. A total of 4,700 jobs are to be cut in Europe, including 2,800 in Germany. That’s 3.1 percent of global jobs. By relocating abroad, the net reduction will ultimately amount to 3,700 jobs. Read more about this here.
Schaeffler cites competition from China and the slow transition to electric cars as the main problems. The company is by no means alone with these challenges. The bad news from the industry is likely to continue.
This is bad news for the industry, but also for Germany and its economic viability as a whole. According to the Association of the Automotive Industry (VDA), 273,500 people were employed in the German supplier industry in 2023.
In terms of sales, Bosch is the largest supplier, followed by ZF Friedrichshafen and Continental. Schaeffler, for its part, had swallowed up the electric drive specialist Vitesco from Regensburg just a few weeks ago and had thus become one of the world’s ten largest companies in the supply industry with a total of around 120,000 employees. Also well-known brands, but significantly smaller, are Mahle, Brose and Eberspächer. They are all struggling with the challenges of transformation.
After all, Germany was considered a combustion country for decades and was celebrated and envied worldwide for its technology. But electric drives require different production processes and therefore extensive changes within the companies. There are also two trends: The demand for electric cars is significantly higher in other countries than in Germany, and automobile companies are increasingly manufacturing in the sales countries.
A difficult situation for German manufacturers and their suppliers. On the one hand, they have to prepare for the production of electric cars. As a result, some jobs have already been cut. Unlike conventional combustion engines, electric cars eliminate the complex parts for the engine, transmission and exhaust system, including exhaust gas purification, and therefore require fewer people in the production chain. At the same time, however, the change is often very expensive.
On the other hand, demand has not yet picked up to the extent that was forecast for a long time. This also means that many investments have not yet paid off and built-up capacities are not being used. Into this mix come the much cheaper electric cars from China, which are heavily subsidized by the state, which put additional pressure on the industry.
This has serious consequences: The management consultancy Horváth had already asked 50 automotive suppliers, including 35 German companies, about their future plans in the second quarter. 60 percent of German companies stated that they were aiming for moderate job cuts in order to reduce costs.
The first shocking reports didn’t take long to arrive. Supplier ZF Friedrichshafen announced in the summer that it planned to cut 11,000 to 14,000 jobs over the next four years. Bosch was already talking about 7,000 job cuts months ago. Last week, CEO Stefan Hartung told the “Tagesspiegel” that he “cannot rule out the possibility that we will have to further adjust personnel capacities.” Around 5,000 jobs have been cut and saved at Continental since 2023, and more than 7,000 more jobs are expected to be cut by 2028. Schaeffler now joins this list.
The direction seems clear, because in 2018 there were still 311,000 employees working in the supplier industry; currently there are still around 270,000. Industry observers expect the number to continue to fall to around 200,000 by the end of the decade.
Interview Between Time.news Editor and Industry Expert on the Current Automotive Crisis
Editor: Welcome to the show! Today, we’re delving into a critical issue facing the automotive industry, particularly in Germany, where job cuts are looming due to significant shifts in the sector. To help us understand the intricacies of this crisis, we have Dr. Maria Schneider, an expert in automotive economics and supply chain dynamics. Thank you for joining us, Dr. Schneider.
Dr. Schneider: Thank you for having me! It’s a pleasure to discuss what’s happening in the automotive sector.
Editor: The news surrounding Schaeffler’s announcement to cut 4,700 jobs is alarming. Can you shed some light on what’s driving these job reductions and how they might impact the wider automotive supply chain?
Dr. Schneider: Absolutely. Schaeffler’s decision is very much a response to the broader pressures faced by the automotive industry, particularly from the transition to electric vehicles (EVs) and fierce competition from international markets, especially China. As they move away from traditional combustion engines, the need for fewer complex parts means less manpower is required in production.
Editor: So, the move towards electric vehicles is not just a change in product offerings, but a radical shift in the manufacturing process as well?
Dr. Schneider: Exactly. The production of electric cars eliminates many components—like those involved in the engine, transmission, and exhaust systems. This simplification reduces the overall need for labor. However, transitioning to electric production requires significant investment—both in terms of technology and re-skilling the workforce.
Editor: It seems like a double-edged sword. On the one hand, there’s a push for modernization, and on the other, we have the threat of job losses. How will this affect Germany’s position in the global automotive market?
Dr. Schneider: Germany has long been viewed as a leader in automotive technology, but this transition acts as both a challenge and an opportunity. Demand for electric vehicles is growing faster in markets outside Germany, which is pressuring local manufacturers to adapt. If they fail to adjust quickly and effectively, they risk losing their competitive edge on the world stage.
Editor: Schaeffler’s CEO mentioned that delaying structural adjustments could lead to more drastic measures down the line. What might we expect to see in the near future if these adjustments aren’t made now?
Dr. Schneider: If manufacturers and their suppliers don’t start to adapt strategically, we could see a cascade effect across the industry. More job losses could follow as firms continue to struggle with underutilized capacity and falling demand—a situation that’s compounded by importing cheaper, subsidized EVs from China. This could lead to a vicious cycle of cuts, loss of expertise, and diminished innovation in the German automotive sector.
Editor: It appears that this shift has far-reaching consequences not only for the companies involved but also for the broader economy. What specific actions should companies take to mitigate these risks?
Dr. Schneider: Companies need to invest in training and development for their workers to equip them with the skills required for electric vehicle production. Additionally, greater collaboration between automotive manufacturers and suppliers can create efficiencies and optimize production processes. Lastly, exploring innovative partnerships and investing in research to stay ahead in technology will be crucial for the future.
Editor: It’s a complex situation indeed. What role do you think government policies should play in supporting this transition for workers and manufacturers alike?
Dr. Schneider: Government support is crucial. This could take the form of subsidies for retraining programs, investment in R&D for EV technology, and creating an ecosystem that encourages sustainable practices. Without such backing, many companies may struggle to cope with the financial burden of transitioning while also maintaining a skilled workforce.
Editor: Thank you, Dr. Schneider, for your insights into this pressing issue. It’s clear that the automotive industry is at a crossroads, and how it navigates this transition could redefine Germany’s economic landscape.
Dr. Schneider: Thank you! I hope that stakeholders realize the urgency for proactive strategies to ensure a sustainable future for the industry.
Editor: That’s a wrap for today’s discussion. Thank you to our audience for tuning in—we hope you found it insightful!