ZF, one of Germany’s largest automotive suppliers, is to axe up to 15,000 jobs over the next five years due to “a freeze in consumer demand” for cars in the wake of the Covid-19 pandemic, according to an internal email seen by the Financial Times.
“Our company will make severe financial losses in 2020,” chief executive Wolf-Henning Scheider and human resources boss Sabine Jaskula wrote to staff, adding that revenues would remain well below targets for at least two years.
“These losses threaten our financial independence and if we fail to meet certain cost targets, external lenders could demand influence on our business decisions,” the email read. “We want to avoid this and continue to pursue the ZF way independently.”
The Friedrichshafen-based company, which employs almost 150,000 people in more than 40 countries, said at least half of the job cuts would be in Germany, where roughly 40,000 of its 51,000 workers are already enrolled in the state-sponsored job-retention scheme.
Gunnar Flotow, a spokesman for the works council at ZF, told public TV station SWR that unions would “fight for every job, and our primary goal remains to secure employment”.
ZF, which is largely owned by the Zeppelin Foundation, said it would not comment on internal correspondence.
However, Andreas Brand, the mayor of Friedrichshafen who sits on ZF’s supervisory board, said the Zeppelin Foundation “always has the welfare of its society and, in particular, its employees in mind”, and that he welcomed the fact that management was negotiating with unions and workers’ representatives.
Unlike rival Continental, sales from China, where its factories are almost back to normal, account for only 20 per cent of ZF’s annual turnover.
Demand from the country, which has largely lifted coronavirus restrictions, has led to an increase in production at some German plants. “However this is not enough to compensate for our losses in other parts of the world,” the executives said.
The announcement comes as French carmaker Renault said it would cut approximately 15,000 jobs, and slash €2bn in costs due to sharp falls in demand.
The coronavirus crisis has compounded automotive suppliers’ pre-existing woes. ZF’s profits had already declined by €600m in 2019, which Mr Scheider attributed in part to the “special challenges connected to the overall transformation of our industry”.
A survey by the Munich-based Ifo Institute found that vehicle construction in Germany declined by 41 per cent in April, largely due to factory closures.
ZF is in the process of finalising a $7bn takeover of Swiss brakes-maker Wabco, for which it raised €4.8bn on the capital markets.
Last week, the supplier announced it had secured a €1.35bn credit line, adding to an existing €3bn facility.
Source: Economy - ft.com
