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Auto crisis: Bosch plans to cut 5,500 jobs - VW sticks to plant closures

The automotive industry is deeply mired in crisis, which is now also impacting the largest supplier, Bosch. They plan to cut up to 5,500 jobs - ironically in future fields such as software, automated driving, and e-mobility. At VW, the company remains firm: capacities are to be quickly reduced. IG Metall is responding with warning strikes.

Ironically, it is in the e-mobility sector that management wants to make cuts - because the demand for electric vehicles continues to falter. | Photo: dpa/Alicia Windzio
Ironically, it is in the e-mobility sector that management wants to make cuts - because the demand for electric vehicles continues to falter. | Photo: dpa/Alicia Windzio
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Things are also stirring at the supplier Bosch. In addition to the reduction of thousands of jobs, the technology company is also relying on shorter weekly working hours for some employees in Germany to cut costs. A total of around 10,000 employees are affected, including at the locations in Abstatt, Holzkirchen, Stuttgart-Feuerbach, Schwieberdingen, Hildesheim, Leonberg, Renningen, Schwäbisch Gmünd, and Gerlingen-Schillerhöhe, as a spokeswoman confirmed upon request. Most of those affected currently have contracts that stipulate a weekly working time of 38 to 40 hours. With the reduction of working hours, the salary is also reduced accordingly. 

Criticism of this approach came from the works council chairman of the supplier division, Frank Sell, who is also deputy chairman of the supervisory board of the foundation company. By interfering with employees' pay, a new low point in collaboration with management has been reached. This puts social peace within the company at risk. "We will now organize our resistance to these plans at all levels," Sell announced.

3,800 jobs to be eliminated in Germany

In view of the crisis in the automotive industry, supplier Bosch plans to cut more jobs than previously known. In the coming years, there will be a further "adjustment need" of up to 5,550 jobs, a company spokeswoman said. More than two-thirds of them - a total of 3,800 jobs - are to be eliminated in Germany. According to the information, the numbers are based on planning. Exact numbers are part of the negotiations with employee representatives, which are now to begin. The reduction should be as socially responsible as possible. The agreement concluded in mid-2023, which excludes compulsory redundancies in the supplier division in Germany until the end of 2027, in some parts even until the end of 2029, still applies. In this area, at the end of 2023, about 72,000 of the approximately 134,000 Bosch employees in Germany were employed.

Software sector particularly affected

The most affected by the current plans is the Cross-Domain Computing Solutions business area, which is responsible for assistance systems and automated driving, for example. By the end of 2027, 3,500 positions are to be eliminated worldwide, approximately half of them in Germany. According to the works council, the locations affected include Leonberg, Abstatt, Renningen, and Schwieberdingen in Baden-Württemberg, as well as Hildesheim in Lower Saxony.

In addition, around 750 jobs are to be eliminated at the Hildesheim plant, where Bosch manufactures products for electromobility, by 2032 - the majority of them (600) by the end of 2026. Furthermore, there are savings plans for the division that manufactures steering systems for cars and trucks. At the Schwäbisch Gmünd location, up to 1,300 jobs are to be eliminated between 2027 and 2030 - more than a third of the employees there.

Reason for downsizing plans: Crisis in the auto industry

The supplier justifies the savings plans with the crisis in the car industry. "Global vehicle production will stagnate at around 93 million units this year, if not slightly decline compared to the previous year," Bosch announced. Next year, only slight recovery is expected. There are significant excess capacities in the industry. Competition and price pressure have also increased. 

According to information from Bosch, manufacturers are ordering significantly fewer parts for e-cars, which leads to staff surpluses in Hildesheim. Additionally, the market for future technology is developing differently from Bosch's expectations: driver assistance systems and solutions for automated driving are not in as much demand as predicted. Currently, many such projects are being postponed or abandoned by manufacturers, it was said.

In the steering division, Bosch is affected by increased competition. In response, the company plans to bundle functions and reduce costs. This also involves better utilizing existing plants abroad with different cost structures to be able to offer steering systems at competitive prices internationally.

Hartung: 2024 fared worse than expected

Bosch CEO Stefan Hartung defended the downsizing plans: "We are under considerable cost pressure and need to rethink our structures to utilize our capacities," the manager told "Automobilwoche". According to Hartung, if significant volumes in e-mobility drop, structural problems arise that Bosch must address by adjusting resources.

According to Hartung, 2024 fared worse than expected. He recently announced that Bosch will not achieve its economic targets this year. Contrary to the initial forecast, the company expects sales in 2024 to be slightly below those of the previous year. In 2023, Bosch generated just under 92 billion euros. The company will also miss its targets concerning profitability, i.e., the profit margin from sales.

In recent months, Bosch also reduced working hours for numerous employees - and consequently the salary. "Due to the company's unilateral intervention in the employees' pay, we have also reached a new low in our cooperation with management," Sell further stated. This puts social peace within the company at risk. "We will now organize our resistance to these plans at all levels."

Repeated plans at Bosch revealed

For over a year, plans of the technology group to cut jobs worldwide have repeatedly come to light. Overall, it concerns more than 7,000 jobs. A significant portion of German locations is affected - including areas in the automotive supplier division, but also in the tool division and the home appliance subsidiary BSH. Thousands of Bosch employees across the country protested against the planned cuts in the spring. More than 10,000 people came to the company's headquarters on the Gerlinger Schillerhöhe near Stuttgart alone at the time. Large protests with around 15,000 participants also took place at other locations.
 

Industry in Crisis: VW Stands Firm on Plant Closures

The automotive industry is in crisis due to weak economic conditions and suffers from weak demand, especially for electric cars. Ford plans to cut 2,900 jobs in Germany by 2027. In the fully electric plant in Cologne, where short-time work is already in place, one in four jobs is set to be cut. At Volkswagen, wage cuts, plant closures, and job reductions are being considered, with the works council stating that three plants and tens of thousands of jobs are at risk. IG Metall plans to mobilize against this with warning strikes. Suppliers ZF, Continental, and Schaeffler also plan to cut thousands of jobs.

Volkswagen remains committed to its plans for plant closures in Germany despite employee resistance. "We need to reduce our capacities and adapt to new realities," VW brand chief Thomas Schäfer told "Welt am Sonntag." This includes not only the vehicle plants but also component locations. When asked if VW could refrain from closing a plant, Schäfer said, "We currently don't see that."

Schäfer did not rule out layoffs either. He stated that job cuts "via demographic curves and with existing instruments like early retirement and termination offers won't suffice." That would take too long. He envisions a three or four-year timeframe for rebranding the brand.

"It's pointless to extend a restructuring until 2035. By then, the competition would have overtaken us long ago."

The aim is to lead the Volkswagen brand back to the top of the volume segment. To achieve this, the company must be put on stable economic footing. "Specifically, our capacities in Europe are too high. They were planned for a market of around 16 million vehicles per year; now the European auto market has shrunk to 14 million," said the manager. At the same time, VW in Germany is struggling with structural disadvantages, including labor costs. These are roughly twice as high compared to competitors and VW's own locations in Southern and Eastern Europe.

Warning Strikes in Early December

Schäfer agreed with IG Metall's demand for salary cuts at the management level as well. "If there is an agreement in the tariff negotiations, then it goes without saying for me that the board and management should also contribute," he said. Since January, the board's fixed salaries have been reduced by five percent, and management has forgone an inflation adjustment of 1,000 euros and a 3.5 percent salary increase.

Volkswagen will experience warning strikes at the beginning of December. The IG Metall tariff commission unanimously decided on this, the union announced on Friday. Following the tariff round, which has so far been unsuccessful, they want to increase the pressure. Plant closures and mass layoffs are still on the table. The union did not initially specify details regarding dates and affected locations. IG Metall negotiator Thorsten Gröger had previously emphasized, "If necessary, it will be an industrial action that Germany hasn't seen in decades." 

Translated automatically from German.
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