Continental is looking to reorganise up to a possible 20,000 jobs by 2029 as it seeks to reduce its gross costs by around EUR500m (US$547m) annually from 2023.
However, it is unclear just how many of the 20,000 posts will actually disappear, as the supplier refers to those jobs as “expected to be affected” rather than simply being cut.
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Continental estimates the programme to cost around EUR1.1bn in its ten-year term, with most of this incurred between 2019 and 2022, but does not rule out what it refers to as “additional projects” if the current initiative does not achieve the desired impact.
The moves could see up to 20,000 of more than 244,000 jobs worldwide “affected,” including around 7,000 of more than 62,000 in Germany.
By the end of 2023, around 15,000 jobs are expected to be affected, including about 5,000 in Germany. At the same time, the software-based portfolio will be expanded.
Continental insists a “large number of jobs will be created” in this sector and in growth areas in the coming years.
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By GlobalDataThe restructuring will have various effects on affected jobs. These include job cuts due to a number of reasons such as lower business volumes as a result of weaker markets and the discontinuation of operating activities.
Changes will also arise from the possible sale of parts of the business and (sub)segments to external parties, as well as from the transfer of jobs to other Continental locations in order to ensure market proximity and/or enhanced competitiveness.
Other changes will arise from the transfer of jobs to future technologies such as electric mobility. Finally, changes will also result from the declining number of traditional tasks and activities due to the transition to a digital working world and the structural alignment with the requirements of Industry 4.0.
“Thanks to our organisational realignment, our solid balance sheet structure and our Strategy 2030, we are well prepared for the challenges ahead,” said Continental CEO, Elmar Degenhart.
“We see the technological upheaval in our industries first and foremost as a huge growth opportunity. With our structural programme, we are also responding proactively to the crisis in the automotive industry and, like ten years ago, we will emerge stronger.”
In the meeting on September 25, the executive board and supervisory board decided to review required structural adjustments at the following locations:
The Instrumentation & Driver HMI business unit intends to gradually withdraw from mass production at the location in Babenhausen, Germany, by the end of 2025. In addition, in order to reduce development costs to a competitive level, the business unit plans to transfer certain research and development activities from Babenhausen to other locations by the end of 2021.
In total, more than 2,200 jobs are likely to be affected by both measures according to initial planning.
The accelerated transition to the future technologies of electric mobility will have an impact on the following four locations:
- In Roding, Germany, where around 540 people are currently employed, the production and development of hydraulic components for gasoline and diesel engines (high-pressure pumps) is to be discontinued in 2024, with around 320 production jobs expected to be affected. For the remaining 220 jobs, the plan is to transfer them to similar functional areas
- In Limbach-Oberfrohna, Germany, where around 1,230 people are currently employed, the hydraulic components business for diesel engines (injectors) is to be discontinued in 2028, with approximately 860 production jobs expected to be affected. For the remaining 370 jobs, the plan is to transfer them to similar functional areas
- At the location in Pisa, Italy, where around 940 people are currently employed, the production of hydraulic components for gasoline engines (injectors) is to be discontinued between 2023 and 2028, with around 500 jobs expected to be affected. For the remaining 440 jobs, the plan is to transfer them to similar functional areas
- In addition, discussions will soon begin with the aim of closing the location in Newport News, Virginia, where around 740 people are currently employed, in 2024. Hydraulic components for gasoline engines (injectors) are manufactured at the plant.
Existing customer orders will be fulfilled despite the planned changes.
The supervisory board approved the closure of the location in Henderson, North Carolina, where around 650 employees currently produce hydraulic brake systems. The plant has been unable to acquire new customer projects in recent years.
The company’s management also informed the supervisory board about the planned cessation of truck tyre production at the location in Petaling Jaya, Malaysia, which currently has 270 employees, by the end of 2019.
The company’s management and employee representatives will report separately on the results of the joint discussions at a later date in 2019.
“Our structural programme is designed to have a rapid impact,” added Degenhart, “so we can successfully head into the future of healthy mobility at full speed. Like our industries, we need to adapt extremely quickly.
“The programme will require our full concentration and its decisive implementation will push us to the limit and sometimes even beyond.
“We are determined to protect our affected employees as much as possible and offer them prospects for the future. For our structural transformation, we will take advantage of natural fluctuation and demographic change in the coming years.
“Operational redundancies will be the very last resort, but we cannot currently rule them out. Should they prove to be unavoidable, we will support our departing employees as best we can.”
Continental was not immediately available to clarify how many of the 20,000 jobs cited will be cut.
