€1 billion per year to be saved
The automotive supplier Continental must take cost-cutting measures because of the Corona crisis. The company has been struggling with bad news for a few years now. First it was announced that nine plants in the drive division would be closed and that the coolant plant in Oppenweiler would not be able to survive for long. Now the pandemic is forcing Continental to make even more drastic cost reductions. Previously, group president Elmar Degenhart spoke only of approximate figures such as “several hundred million euros” that must be saved.
Continental recently announced that parts of the strategy now presented “are likely to lead to the relocation or closure of plants and parts of operations at locations with permanently high costs, technologies that are being phased out or foreseeable medium to long-term uneconomic utilization of production capacities”.
Examples of savings measures
Savings are to be made in production, research and development. A savings target of over one billion euros per year is being considered. Before that, it should only be 500 million. Degenhart explains: “The entire automotive industry currently faces enormous challenges. None of its crises of the past 70 years has been bigger or sharper. It hits the suppliers particularly hard”.
In other words: 20,000 job cuts will turn into 30,000. In Germany, the number will then grow by 6,000 to 13,000 jobs, which are to be cut. These include the Thuringian plant in Mühlhausen, which employs 150 people – it is to be closed by 2022. The automotive plant in Karben is also to stop production by 2024. At the moment around 1,100 people are employed there. The company management announced that a total of 90 percent of the measures are to be implemented by 2025.
Continental is not alone
The automotive industry will be forced to take austerity measures. Not only the economy is weakening, but the effects of the pandemic are also straining the market. While manufacturers are having to produce less and reduce overcapacities, suppliers are also far from being fully operational.
That is why not only Continental has to take such drastic measures. ZF Friedrichshafen has also announced plans to cut 15,000 jobs. Reduced working hours and redundancies will also affect Bosch employees.