Volkswagen and Mercedes-Benz supplier to close five plants and cut 3460 jobs
The crisis in Europe’s automotive industry has reached another major component manufacturer. German industrial group Schaeffler will close five plants and cut 3460 jobs by 2028. Germany will bear the brunt of the cuts, losing 2660 positions. The company’s predicament is telling: demand for combustion-engined cars is falling, but electric vehicle production is not growing fast enough to fill the gap.
Four plants in Germany, one in Belgium
The new cost-cutting programme affects 16 production and development sites in Europe. The company will close its plants in Dortmund, Morbach, Berlin and Schwalbach in Germany, along with its production site in Herstal, Belgium.
The Dortmund plant currently employs 430 people and Morbach 160. Both plants make components for internal combustion engines.
The Berlin plant employs around 270 people. Most of Schwalbach’s 385 employees will have the opportunity to continue working in Frankfurt, but the restructuring will eliminate around 190 positions.
Schaeffler will also scale back production and development in France and Slovakia.
Around half of the job cuts will be in production, 30% in development and the remainder in support functions.
Labour costs 2.5 times as much in Germany
According to Schaeffler chief executive Klaus Rosenfeld, the company spends around 2.5 times as much on employees in Germany as in other European countries.
The group aims to reduce excess production capacity, consolidate development activities and simplify its management structure. Annual savings are expected to reach €300 million by 2030.
The restructuring will initially cost around €480 million. As a gesture of solidarity, the company’s executive board will reduce its base pay by 10% for two years.
The new programme comes on top of the 4700 job cuts announced in 2024. The total number of planned job losses across the two cost-cutting rounds therefore exceeds 8000.
The transition to electric cars has left suppliers caught in the middle
Schaeffler manufactures bearings, powertrain components, hybrid systems and electric drives. Its customers include Volkswagen, Porsche and Mercedes-Benz.
The company’s difficulties illustrate a structural problem in Europe’s automotive industry.
Demand for internal combustion engine components is shrinking, but slower-than-expected growth in electric car sales is preventing sufficient use of new production capacity. At the same time, European suppliers face pressure from Chinese competitors, whose cost base is often considerably lower.
Schaeffler’s situation is not unique. Bosch and Continental have also cut jobs and adjusted production to match demand in the car market.
The decline in development capacity poses a particularly serious threat to Europe’s automotive industry. With nearly a third of Schaeffler’s cuts affecting research and development, the reductions mean not only lower costs today but also fewer staff to develop future technologies.
The next growth opportunity lies in robotics
Schaeffler does not intend to remain dependent solely on the automotive industry. The group is expanding into the markets for humanoid robots and defence-sector components.
In both fields, the company can draw on its existing experience in precision engineering, bearings and electric drives.
This is a logical direction, but the new business areas will not necessarily be able to offset the decline in automotive component production volumes quickly.
Schaeffler’s job cuts show that the biggest problem facing Europe’s automotive industry is not just the cost of electrification, but the timing of the transition. The traditional business is shrinking faster than the new one can grow. This hits suppliers hardest, as their investments and production capacity depend on carmakers’ plans for the future.
