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Schaeffler worsens German car-parts strife with 4,400 jobs cut

Oliver Sachgau
Bloomberg

Schaeffler AG will cut 4,400 jobs and close or sell several German plants as the automotive supplier joins peers in reeling from the coronavirus pandemic.

Most of the reductions will take place at a dozen facilities in Germany and two sites elsewhere in Europe, the maker of engine, transmission and chassis components said in a statement Wednesday. Factories in Wuppertal, Eltmann and Clasthal-Zellerfeld will be shut or shopped to other companies, with the cuts expected to save Schaeffler as much as 300 million euros ($355 million) a year.

“Although in recent months demand has pick up across all of Schaeffler’s three divisions and four regions, uncertainty surrounding the pandemic outlook and the resulting economic downturn remains high,” the company said.

Schaeffler AG will cut 4,400 jobs and close or sell several German plants as the automotive supplier joins peers in reeling from the coronavirus pandemic.

Schaeffler shares pared losses, trading down 1% to 5.73 euros as of 3:30 p.m. in Frankfurt. The stock is down more than 40% this year.

Parts makers including Schaeffler and Continental AG, which are controlled by the same billionaire family, have been dealing with a massive drop in demand for components after Covid-19 forced the shutdown of production lines earlier this year. Although Chancellor Angela Merkel has resisted calls for more state support for the sector, German government and industry leaders are holding talks on ways to support companies, with a particular focus on suppliers.

The company announced plans last month to raise as much as 1.3 billion euros by issuing new shares to bolster its finances.

Schaeffler had already extended a voluntary severance program to 1,900 positions in Europe. Chief Executive Officer Klaus Rosenfeld told Bloomberg last month the company was considering more cuts but would need to see how economies were recovering.

Revenue fell by more than a fifth in the first six months of the year, though the company still managed to generate a small profit.