Schaeffler announces 4,700 job cuts in Europe

German automotive supplier Schaeffler has announced plans to cut 4,700 jobs across its European operations, with Germany bearing the brunt of the reductions, as the automotive industry’s slowdown continues to impact supply chain companies. The decision reflects growing pressures in the German automotive sector, particularly affected by Volkswagen’s recent challenges.

The restructuring will primarily impact German operations, with approximately 2,800 positions to be eliminated across ten sites in the country. The remaining job cuts will be distributed throughout Europe, including two facility closures, though specific locations remain undisclosed. The company notes that about 1,000 positions will be reduced through redeployments, resulting in a net reduction of 3,700 jobs, representing 3.1 percent of Schaeffler’s 120,000-strong workforce.

In announcing the cuts on November 5, Schaeffler cited multiple factors driving the decision: “The challenging market environment, the increasing intensity of global competition, and ongoing transformation processes affecting the automotive supply industry.” The move comes as the company grapples with significant market headwinds, particularly evident in its third-quarter results, which showed a 45 percent decline in adjusted earnings before interest and tax to €187 million.

The supplier industry’s struggles mirror broader challenges facing German automakers. Volkswagen, Schaeffler’s largest customer, is considering unprecedented plant closures in Germany and negotiating a 10 percent wage reduction with unions. Other major suppliers are facing similar pressures: Robert Bosch has warned it will miss financial targets, while ZF Friedrichshafen plans to cut 14,000 positions by 2028 and has lowered its annual guidance. Continental is planning to spin off its struggling automotive components division.

Despite these challenges, Schaeffler maintains its full-year margin forecast of 5 to 8 percent. The company expects its efficiency plan to generate annual savings of approximately €290 million ($315.4 million) by the end of 2029, though implementation costs are estimated at €580 million.

The restructuring comes as Schaeffler seeks to position itself for the industry’s transition to electric vehicles. The company recently completed a €3.6 billion acquisition of Vitesco Technologies Group, a specialist in hybrid vehicle components with strong electric vehicle supply chain capabilities. This strategic move has already expanded Schaeffler’s e-mobility business across regions.

The job cuts highlight the broader transformation occurring in the automotive industry as it shifts toward electric vehicles. Traditional suppliers are being forced to adapt their operations and workforce to meet changing market demands while maintaining profitability. The situation is particularly acute in Germany, where the automotive sector is a crucial component of the national economy.

These developments indicate a significant restructuring of the automotive supply chain, with traditional suppliers like Schaeffler attempting to balance cost reduction with investments in future technologies. The company’s actions reflect the industry-wide challenge of managing the transition to electric vehicles while maintaining financial stability during a period of reduced demand and increased competition.

The announcement underscores the interconnected nature of the automotive industry, where challenges faced by major manufacturers like Volkswagen can quickly cascade through the supply chain, leading to significant workforce reductions and operational changes at supplier companies.