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An automobile supply chain giant announces layoffs

2024-04-24 Update From: AutoBeta NAV: AutoBeta > News >

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AutoBeta(AutoBeta.net)03/03 Report--

Recently, German auto parts manufacturer Continental Group announced that it will start layoffs in order to enhance the competitiveness of the auto group's business and improve the R & D efficiency of its automotive department. According to earlier officials, 1750 R & D jobs will be cut in the automotive business, while about 5400 administrative positions will be streamlined and cut a total of about 7150 jobs, accounting for about 3.6 per cent of Continental's global workforce.

Officially, the layoffs will be completed by the end of next year.

It is worth noting that the news of the layoffs of Continental Group is not surprising. As early as November, officials announced that the auto group was simplifying and adjusting its business and administrative structure, hoping to cut costs by 400 million euros (30.8 billion yuan) a year by 2025. In December, officials launched a "lead-focus-execute" strategy that hopes to enhance long-term competitiveness by improving efficiency, strengthening cooperation and focusing on growth areas. With regard to the layoffs, Philipp von Hirschheydt, a member of the executive board of Continental Group, said that by integrating the R & D network, achieving synergies and cost reduction, while shortening the development cycle and focusing on high-growth prospects, the company will further enhance its long-term competitiveness.

Of course, Continental's layoffs also have something to do with perennial losses in its automotive business unit.

The data show that Continental Group was founded in 1871 and mainly produces rubber products such as tires, braking systems, body stability control systems, engine injection systems, tachometers, and other automotive and transportation industry parts. It is currently the fourth largest tire manufacturer in the world and the top ten auto parts suppliers in the world. At present, Continental Group has four sub-groups of automobile, tire, ContiTech and contract manufacturing, of which the main source of profit of Continental Group is Tire Group.

Data show that in the third quarter of last year, Continental's group sales were 10.2 billion euros, down 1.5 per cent from a year earlier. Of this total, Tire Group's sales in the third quarter were 3.4 billion euros, down 5.4 per cent from a year earlier. The adjusted profit margin before interest and tax increased to 13.2%. Continental Group said that the high profits are mainly due to the continued high market share of luxury tires and the reduction of raw material costs. ContiTech's third-quarter sales were 1.7 billion euros, down 1.0% from a year earlier. Sales of the automobile group rose 1.8 per cent to 5 billion euros in the third quarter. Compared with the previous two quarters, the auto group's earnings improved, but the loss was still large, with a loss of about $28.23 million in the first three quarters. In fact, for the auto group, officials also made adjustments last year to consolidate the car business into a separate unit focused on electric vehicle technology. Although the auto sector's earnings improved in the third quarter of last year, the results are still not satisfactory.

In fact, with the rapid development of electric vehicles. In this context, traditional auto parts suppliers are also facing tremendous pressure.

Recently, it is not only Continental Group that has started big layoffs. As early as January, auto parts supply giants such as ZF, Bosch and Valeo have already started layoffs. On January 17th, ZF announced plans to cut 12000 jobs in Germany over the next six years. On January 19th Valeo announced that it would cut 1150 jobs worldwide in order to improve the group's competitiveness and efficiency in the context of car electrification. On the same day, Bosch announced that it would cut 1200 jobs by 2026 due to sharp increases in energy and raw material costs, recession and high inflation, of which 950 would be laid off in Germany.

From the layoffs of several auto parts giants, it is not difficult to see that with the rapid development of electrification, in order to keep up with the transformation of the auto industry, auto parts companies have to start layoffs in order to survive. Of course, to a certain extent, reducing costs and increasing efficiency can solve the urgent needs of these traditional auto parts suppliers and preserve their strength. However, in the challenging market environment, it is still necessary to speed up the pace of change.

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