Schaeffler, a major car parts manufacturer, announced significant job cuts and site closures as it grapples with declining demand for combustion engine components and the slow adoption of electric vehicles. Approximately 2,660 of the job cuts will occur in Germany, affecting key plants in Dortmund and Morbach, among others.
The company aims to reduce its workforce by about 18% by 2028, which includes previous retirement agreements. This restructuring is expected to yield an annual earnings boost of approximately 300 million euros ($336 million) by 2030.
Schaeffler's revenue fell by 0.2% year-on-year to 5.8 billion euros in the third quarter, with earnings before interest and taxes dropping by 7.2% to 245 million euros. The challenges faced by Schaeffler are reflective of a broader trend in the European automotive industry, where new car registrations have significantly declined from 15.3 million units in 2019 to a projected 10.8 million in 2025.
The shift towards EVs, which accounted for 22.7% of new registrations in the EU over the past year, is intensifying competition, particularly from Chinese manufacturers. Schaeffler's CEO, Klaus Rosenfeld, emphasized the need for the company to adapt by reducing overcapacity and exploring new markets such as defense and robotics, as Europe increases military spending.
The company's strategic pivot includes establishing a defense subsidiary and focusing on automation and AI to enhance efficiency