Thursday, December 3

Continental Expands Restructuring

Source: Continental announcement

HANOVER, Germany –  Continental is expanding the Transformation 2019–2029 structural program it initiated in 2019 with additional measures to cut costs and increase efficiency.

The program in general is aimed at ensuring the company’s viability and strengthening its global competitiveness over the long term. As announced Tuesday, Sept. 1st in Hanover, the goal is to achieve gross annual savings now totaling more than €1 billion from 2023 onwards.

The Hanover-based company is thus further increasing its previous savings target, which it has already announced on several occasions, by slightly more than €500 million. The reasons for this include the persistently low global vehicle production as well as the deepening economic crisis as a result of the coronavirus pandemic. The company does not expect the vehicle production to return to the pre-crisis levels of 2017 before 2025.

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“The entire automotive industry is currently faced with enormous challenges. It has not experienced a larger, more severe crisis in the past 70 years,” said Continental CEO Dr. Elmar Degenhart.  “This crisis is hitting suppliers particularly hard. It will demand a lot from us in the short term and push us to our limits in the coming years.

“After roughly a decade of fast, profitable growth and workforce expansion in line with the growth model of the automotive industry at that time, we are now gearing our operations to a new kind of growth with future technologies. That is why we are in intensive discussions with employee representatives to find the most sustainably effective solutions and strike a balance with the interests of our workforce.”

All central functions and business units are contributing to the targeted savings and optimizations at all locations in Germany and abroad. Subject to the approval by the Supervisory Board, the strategy includes the bundling of production, research and development tasks at the most competitive locations worldwide as well as portfolio adjustments.

In addition, the company is pushing ahead with the automation of its processes, with for instance Industry 4.0, as well as providing greater work flexibility and cutting labor costs. Furthermore, business operations that are persistently unprofitable are to be sold.

Parts of this strategy will likely lead to the relocation or closure of facilities and operations at locations where costs are persistently too high, where technologies are becoming obsolete, or where production capacities cannot be utilized profitably in the medium and long term.

Overall, Continental expects that the planned changes from the ongoing structural program, which was initiated in September 2019 and has now been expanded, will all in all likely affect more than 30,000 jobs directly worldwide in the future.

These will be modified, relocated, or made redundant. About 13,000 of those jobs are located in Germany, and a further major portion in countries which also have high labor costs. 90 percent of the targeted adjustments should have been completed by 2025.

Continental currently employs more than 232,000 people worldwide, including about 59,000 in Germany.

To view the entire announcement click HERE.

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