HERZOGENAURACH, Germany—Auto components supplier Schaeffler Group plans to to cut 4,400 jobs in Germany and Europe by the end of 2022 due to a sharp drop in demand from the COVID-19 pandemic.
On Sept. 9, the German group introduced a package of measures aimed at downsizing capacity, consolidating locations, and strengthening overall competitiveness.
The automotive supplier expects the restructuring to cost $833 million, delivering annual savings of $300 million to $350 million, with 90 percent of that realized by 2023.
"Although in recent months demand has picked up across all of Schaeffler's three divisions and four regions, uncertainty surrounding the pandemic outlook and the resulting economic downturn remains high," Schaeffler said in a statement.
Moreover, the group anticipates overcapacity at its production plants given the projections of slow market recovery through 2025.
The changes mainly will apply to 12 locations in Germany and two other locations in Europe.
Schaeffler's larger locations in Herzogenaurach, Buehl, Schweinfurt, Hoechstadt and Homburg will undergo capacity downsizing and consolidation.
As part of that, the group aims to establish a hydrogen technology laboratory facility at its Herzogenaurach headquarters and focus on e-mobility solutions for OEMs at its location in Buehl.
Most of the restructuring package will impact locations with "technologically obsolescent product portfolios or highly fragmented plant structures."
Such locations include the Wuppertal, Luckenwalde and Eltmann plants, the group's engineering location in Clausthal-Zellerfeld, and its automotive aftermarket operations in Hamburg and Cologne.
Schaeffler said it would outline the plan specifics for each location during local employee meetings.
The restructuring follows a major 2018 reorganization plan that involved adjusting its European production footprint and streamlining structures in line with the automotive industry's transformation.