Germany-based car parts supplier Continental provided updates on Wednesday for its previously announced restructuring plan, adding information that includes cutting more than 5,000 jobs.
The Hannover company's "Transformation 2019-2029" global restructuring program — aimed to strengthen Continental's long-term competitiveness — involves discontinuing business in hydraulic components for gasoline and diesel engines in the coming years against the backdrop of the automotive industry's transition to electric mobility. The company said that movement has been accelerated by stricter emissions laws, resulting in a drastic decline in demand for hydraulic components.
The restructuring also includes Continental phasing out production of display and control technologies at its Babenhause, Germany location by the end of 2025, with certain research and development activities to be transferred to other locations by the end of 2021. "This is necessary due to the industry’s abrupt switch from analog to digital technologies, as well as a rapidly deteriorating competitive situation and a corresponding sharp increase in cost pressure," the company stated.
"We are making good progress. With its resolutions today, the Supervisory Board is supporting our urgently needed technological transition and thus the strengthening of our competitiveness and future viability," Continental CEO Dr. Elmar Degenhart said. "We are focusing on profitable growth areas, quickly and rigorously. These include assisted, automated and connected driving; services for mobility customers; and the tire, industrial and end-customer businesses. The jobs of the future will evolve in these growth areas."
Continental provided a breakdown of confirmed job cuts that will occur at five locations:
- Roding (Germany): Discontinuation of production and development of hydraulic components for gasoline and diesel engines (high-pressure pumps) in 2024, resulting in the closure of the location. As things stand, around 520 jobs will be affected.
- Newport News, Virginia (US): Closure of the location in 2024, where around 720 people are currently employed. Hydraulic components for gasoline engines (injectors) are manufactured at the plant.
- Limbach-Oberfrohna (Germany): Discontinuation of the hydraulic components business for diesel engines (injectors) in 2028. As things stand, around 850 jobs will be affected at this location.
- Pisa (Italy): Discontinuation of production of hydraulic components for gasoline engines (injectors) from 2023 to 2028. As things stand, around 750 jobs will be affected at this location.
- Babenhausen (Germany): Phasing out of production of display and control technologies of the Instrumentation & Driver HMI business unit by the end of 2025. Moreover, certain research and development activities are to be transferred to other locations by the end of 2021. As things stand, over 2,200 jobs will be affected. The business unit will continue to be managed from Babenhausen, including development and administration activities.
The company said discussions will proceed about a sixth location — Rubí, Spain — about its future prospects. Rubi employs around 760 people who produce analog displays and controls.
The news comes less than a month after the company announced Oct. 22 that it is spinning off its Powertrain business, which was rebranded as Vitesco Technologies as of Oct. 1. On Sept. 24, Continental said its restructuring may affect up to 20,000 total positions.
"We have been holding intensive, constructive talks with employee representatives for some time," Degenhart said regarding next steps. "The crucial question now is: how can we implement the necessary measures responsibly and with foresight so that we can emerge stronger from the current reorganization. We will be supporting those employees affected as much as possible."
In its Thursday press release, Continental noted it has considerably expanded its internal job market for employees affected by the restructuring, and touted its recently-founded Continental Institute of Technology and Transformation (CITT), which offers employees training courses, seminars and further education to retrain them for other tasks.