a bad time for automotive equipment manufacturers

The German equipment and tire manufacturer Continental formalizes the elimination of 7,150 jobs worldwide. A social plan announced last November, which comes into force.

The objective of the German equipment manufacturer Continental, with this plan to eliminate 7,150 jobs, announced Wednesday February 14, is to make savings and improve the competitiveness of the company in the face of the heavy constraints of the energy transition. This is, in any case, the reason given by management. Around 5,400 positions will be affected in administration, 1,750 in the research and development branch, all by 2025. This represents 3% of the group’s entire workforce.

Continental is targeting 400 million euros in savings per year by 2025/2026 by rationalizing and simplifying the activity. Continental is, however, one of the world’s largest automotive suppliers. But like the entire sector in Germany, the company suffers from excessively high energy costs and the difficult transition to electric mobility in a sector which has built its success on thermal cars.

Already last year, Continental announced the closure of several sites, citing high operating costs and falling demand. And he’s not the only one in this case. Another world leader established across the Rhine, the Bosch group, although renowned for its solidity, announced in mid-January a plan to cut 1,200 jobs in its embedded electronic systems division. In this specific case it is not the tires but the vehicle transmissions which are concerned.

The misleading resultseye by Michelin

Continental’s French competitor, the Michelin group, could logically also be affected. However, the company which has its headquarters in Clermont-Ferrand announces profits. In reality, an activity can be profitable but that does not prevent the company from having to make savings to ensure its long-term future. And Michelin’s good results announced for 2023, 3.6 billion euros, are before payment of charges and taxes. This is called operating income. Net profit, what really remains in the company’s coffers after paying taxes, is down for 2023, -1.3% to 1.9 billion euros. Michelin is planning a gradual cessation of activities in Germany by 2025, particularly in its factories in Karlsruhe and Trier.