Auto Supplier ZF Slashes 7,600 Jobs in Cost-Cutting Push
German Company Steps Up Restructuring Efforts in Face of Poor Demand
[Stay on top of transportation news: .]
ZF Friedrichshafen AG is cutting 7,600 positions at its electrified drivetrain division as the German car-parts maker steps up its restructuring efforts to deal with poor demand.
Labor leaders have signed off on the reductions, which are part of a previously announced plan to let go as many as 14,000 workers this decade. Additional savings measures include delaying wage increases and reducing working hours in Germany, ZF said Oct. 1. They’re expected to slash more than 500 million euros ($588 million) in costs by 2027.
The measures underscore the pressures on the German auto industry, which is reeling from sluggish demand in Europe, the cost of tariffs and rising competition from Chinese manufacturers. Robert Bosch GmbH said last week it will cut some 13,000 additional jobs, or about 3% of its global workforce, following similar savings measures from Continental AG and Schaeffler AG. Automakers including Volkswagen AG are dialing back production.
Privately held ZF, which is 94%-owned by the Zeppelin trust fund operated by the city of Friedrichshafen, has been struggling for a while. The company last month ousted its CEO Holger Klein just days after he met with German Chancellor Friedrich Merz at the Munich auto show. His successor Mathias Miedreich, a former head of the Electrified Drive Technologies division that’s now being restructured, will have to reset the strategy of the supplier best known for its transmission systems.
Want more news? Listen to today's daily briefing above or go here for more info
The unit — ZF’s biggest in terms of employment and sales — will halt development of EV-related products while shifting investments to technologies including plug-in hybrid drivetrains. The company said it’s weighing purchasing electric motors and inverters — products it has so far been making in house. Plans to potentially spin off the division, which also makes range extender technology and automatic transmissions, have been scrapped.
ZF has made a string of costly acquisitions in the past decade that have piled on debt, including the $7 billion takeover of US braking systems specialist Wabco Holdings Inc. in 2020.
In April of this year, S&P Global Ratings downgraded its credit rating for ZF to BB-, but gave the company a stable outlook on the expectation that its operating performance will gradually recover. Three months later, ZF warned that falling global car production is eliminating a good portion of the company’s savings successes.
