The automotive supplier Continental is cutting thousands of jobs worldwide in the ailing car division. The administration will be particularly affected; savings of 400 million euros are planned.
The car supplier and tire manufacturer Continental wants to make its ailing car supply division profitable again by cutting thousands of jobs. The DAX company announced today that an annual cost reduction of 400 million euros in the administrative area will take effect from 2025. According to Conti, it is not yet clear exactly how many jobs will be affected. The number is likely to be in the mid four-digit range, it was said.
It is said that the job cuts should be made as socially acceptable as possible. Discussions with the social partners should now begin immediately. At the end of September, the automotive supply business had 102,574 employees, and the group as a whole had 203,593.
Simplify structures
The measures are important to strengthen the competitiveness of the automotive sector, said Philipp von Hirschheydt, who is responsible for the division on the Continental board. The aim is to simplify structures. “We therefore look at all functions and processes from sales to research and development to production with an open mind in order to significantly improve efficiency and effectiveness.”
As part of the restructuring, Continental is dissolving the Smart Mobility division, which brings together segments such as the car spare parts business, commercial vehicle electronics and door and sunroof controls. The organizational structure will be streamlined from six to five business areas. Von Hirschheydt said the goal is to find synergies in technology solutions in order to better respond to market requirements.
In addition to the job cuts in administration, Continental is examining measures to increase efficiency in research and development. A spokesman left it open whether this would also involve job cuts. The company wants to present details of the division’s further strategy at a capital market day on December 4th.
Tire division has to step in
Continental’s automotive division, which is heavily dependent on high investments in new technologies, has been under pressure for some time. Most recently, Continental was able to present black figures in day-to-day business in the division for the third quarter – provided that certain depreciation on previous acquisitions and other special factors were eliminated.
If the special costs are taken into account, the division once again generated a small loss before interest and taxes. With regard to the adjusted operating result, Conti made money for the last time in the 2019 financial year, and there was also an operating loss in the first half of this year.
With losses in recent years, the tire division often had to bring in the money in order to be able to cover investments in automotive supply. For some time now, the tire division has been the group’s profit generator with high and largely stable margins, although the automotive supply business contributes the majority of sales.