Continental cuts more jobs

Continental cuts more jobs

Business news |
By Nick Flaherty

Continental cites the persistently low global vehicle production and the worsening of the economic crisis due to the effects of the coronavirus pandemic as the reasons for the austerity measures. The company does not expect a return to the pre-crisis level of 2017 before 2025 and so plans to save €1bn by 2023. Instead of the 20,000 jobs planned so far, 30,000 jobs are to be cut now. 

“The entire automotive industry is currently facing enormous challenges. None of its crises of the past 70 years has been bigger or sharper,” said Continental’s CEO Elmar Degenhart. “It is already demanding a great deal from us in the short term, and it is challenging us to the utmost for years to come.

According to the CEO, the company must now focus all its energies on developing future technologies in order to return to growth.

All business units including those at the headquarters and at all locations in Germany and abroad are contributing to the targeted savings and optimizations. The strategy includes the consolidation of tasks from production, research and development at the most competitive locations worldwide as well as portfolio adjustments.

In addition, the company is pushing ahead with the automation of its processes, for example through technologies such as Industry 4.0, as well as increasing flexibility of work and reducing labor costs. Furthermore, the sale of unprofitable business units is planned. The company did not initially announce which divisions might be affected by this. In addition, activities with high structural costs are likely to be relocated to more favorable regions and plants with low capacity utilization will be closed.

Overall, Continental expects that the planned changes resulting from the structural program launched in September 2019 and now expanded will probably have a direct impact on around 30,000 jobs worldwide. This means that they will be changed, relocated or abandoned. Approximately 13,000 of these jobs are in Germany, with a further majority in countries where labor costs are also high. By 2025, 90 percent of these targeted adjustments should be completed.

Originally, the company announced measures in September 2019 that would have affected up to 20,000 jobs worldwide, including around 7,000 in Germany. Part of the transformation program has already been completed, directly affecting some 3,000 jobs worldwide since the end of September 2019.

This figure does not include the number of jobs that will be created in the coming years as a result of opposing, positive effects, such as the targeted growth in the future fields of mobility. These include technologies and software for digitization, assisted and automated driving and emission-free mobility.

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