The Automotive Industry Stumbles, Valeo Announces Job Cuts in Europe

The shifting tides of the automotive industry have spelled a very complicated year for the majority of automakers. French car part supplier Valeo has announced job cuts in Europe, which will affect approximately 1,000 jobs. A significant portion of the cuts will occur within France, but other parts of Europe, including Poland, Germany, and the Czech Republic, will also be hit.

Valeo’s job reduction news comes closely after the cuts announced at competitor auto parts maker Bosch, where around 5,550 jobs are being eliminated to accommodate the many changes occurring in the EV industry. Ford has also announced cuts this month, with around 14% of its European workforce making an exit. Similarly, Stellantis is expected to shut down its Vauxhall van factory in England, putting another 1,000 jobs at risk.

Image: Valeo

Valeo Job Cuts in Europe Announced, Restructuring Plans Dominate the Automotive Industry

Valeo’s 1000-strong job cuts will occur across Europe, with over 800 of them in France, where the company’s second largest section of its workforce resides. The company has 112,700 employees spread across 29 countries, of which about 13,500 work in France. According to BNN Bloomberg, there will be 694 forced exits as well as 174 voluntary departures that will span eight sites within the company’s homeland. 

As an addition to Valeo’s layoff plans, the company is shutting down two French sites, La Suze-sur-Sarthe and La Verrière, but some employees are expected to receive offers for positions at other locations. 

Last month, Valeo cut its annual sales guidance for the second time in the year, putting its 2024 sales at €21.3 billion as opposed to the €22 billion previously expected, maintaining the margins and free cash flow guidance for the year. Sales for the July-September fell by 5%, dropping from the €5.1 billion expectation to €5 billion. 

The company remains cautious about its prospects next year, and its concerns hinge heavily on the decline in demand and rise in competition from electric cars. The Valeo layoff announcement arrived amid “a difficult context of massive and lasting declines in volumes and a massive loss of competitiveness in Europe,” with the decline largely attributed to competition from China’s production numbers. 

Valeo Highlights Loss of Competitiveness in European Markets

The loss of European competitiveness is evident in Valeo’s performance and that of the other car makers and adjacent automotive companies. Tire manufacturer Michelin is cutting around 1,250 jobs and Schaeffler is cutting another 4,700 roles. 

German automaker Volkswagen has also announced job reductions across its organization. The company is expected to shut down three factories and there are plans to reduce the pay for workers by 10%. While the company has argued that the cuts are necessary, union workers have been staunchly against Volkswagen’s attempt to backtrack on its promise to avoid cuts in the region. 

The automotive sector isn’t the only one to face disruption this year but its toll on the workers has been considerable nonetheless. As Valeo’s job cuts begin in Europe, the company will continue to look into research and development to determine the best course of action for the business to come out on top in the coming year.