Schaeffler provides more information on structural measures for locations outside of Germany

2024-11-27 | Herzogenaurach

• Bearings & Industrial Solutions division’s bearings production in Berndorf, Austria, to be discontinued
• Company locations in Kysuce, Slovakia, and Brasov, Romania, will take on production capacity but will also be affected by job reductions
• Production of clutches to be discontinued in Sheffield, England, and undertaken at other locations both within and outside of Europe

On November 5, 2024, the Board of Managing Directors of Schaeffler AG announced structural measures for Europe aimed at securing a long-term increase in the company’s competitiveness. Having previously announced the principally affected locations, which are in Germany, the company is now ready to release details regarding four further locations in Europe.

The structural measures in Europe outside of Germany are focused mainly on the Bearings & Industrial Solutions division, which is grappling with continuing economic weakness, structural problems, and increasingly intense competition. However, the measures also stem in part from the ongoing transformation taking place in the automotive supply industry, a development that includes declining volumes of ICE technology products in Europe. The measures therefore also affect the company’s Powertrain & Chassis division.

Within Europe, the program of measures will – as previously announced on November 5, 2024 – impact a total of 4,700 jobs, including around 2,800 in Germany and 1,900 at European locations outside of Germany. Production relocations will reduce the impact in Europe to a net reduction of about 3,700 jobs.

Bearings & Industrial Solutions division – Berndorf, Brasov, and Kysuce
In the Bearings & Industrial Solutions division, Schaeffler plans to cease production in Berndorf, Austria. This location currently produces wheel bearings and wheel hub modules as well as gearbox bearings for the company’s automotive, industrial and aftermarket operations. These products are used primarily in heavy commercial vehicles, such as trucks, tractors, and construction machinery. These sectors are facing strong demand volatility as well as extremely intense cost and price pressures as a result of growing competition in the European market by Asian manufacturers. Because of the Berndorf site’s relatively small scale, it has become very difficult, if not impossible, to manage the strong demand volatility in a way that maintains planning certainty and commercial viability. It is not possible to make up for the sharp increases in material, energy and labor costs of the past few years by imposing further price increases on customers. For these reasons, the above products will in future be produced at more cost-effective locations in the company’s production network in Europe, China, and wider Asia. The sales employees based at the Berndorf site will relocate to new premises.

Schaeffler’s site in Brasov, Romania, is also affected by consolidation measures. The company intends to set up production capacity for standard bearings in Asia, and to consolidate production of brass cages away from Brasov. On the other hand, Schaeffler will set up production capacity for certain products – such as industrial products for European customers – in Brasov. In addition, linear products from Homburg and Taoyuan will be consolidated in Brasov. This will make the Brasov plant a central production location for linear components. The facility there will continue as Schaeffler’s global lead plant for large bearings of up to 4 meters in diameter, including production of components for these bearings. Essential capital investment is also being planned for this location.

In Kysuce, Slovakia, Schaeffler makes products for all four of its divisions. To optimize production costs, the company intends to realign personnel structures there. At the same time, the company plans to establish additional bearing production lines. These lines are currently based in Berndorf, Austria. The Kysuce location continues to play a decisive role in the production of components for ICE and hybrid powertrains and chassis systems. It is also of great strategic importance for Schaeffler’s growing focus on e-mobility. To make the Kysuce location fit for the future, the company will continue as planned to implement its program of capital investment in production, in research and development, and in the campus.

“Through the necessary consolidation of our European production network, we are improving our cost structures and making our company more competitive,” said Sascha Zaps, CEO Bearings & Industrial Solutions. “The focus of our plans is on putting Schaeffler’s bearings business in a strong position for the future, to ensure long-term profitability and optimize collaboration with our customers. Our goal is to find viable solutions with employee representatives and employees as quickly as possible.”

Powertrain & Chassis – Cessation of production in Sheffield planned
The Sheffield location in the UK comes under the Powertrain & Chassis division and produces clutch systems. Most of this production is for passenger cars, although some is for tractors, and most of it is exported. Declining global demand for clutches is leading to production overcapacity.

Schaeffler therefore plans to discontinue this operation. The shift towards automatic transmissions in ICE cars and the powertrain electrification trend have resulted in significantly reduced demand for passenger cars with manual transmissions. This development is also leading to considerable overcapacity in Sheffield. Schaeffler therefore intends to locate its production of passenger car clutches in Szombathely, Hungary. In addition, the company’s production operation for tractor single and dual clutches in Sheffield will in future be sited at its plant in Hosur, India, where demand for these products is increasing. This will reduce production and transportation costs and expand Schaeffler’s production capacity in a growing market.

Consequently, subject to consultation, Schaeffler is planning to relinquish its footprint in Sheffield and transfer employees in the unaffected central functions there to its existing office in Birmingham, England.

Matthias Zink, Schaeffler’s CEO Powertrain & Chassis, summed this development up as follows: “These carefully considered measures will align Schaeffler’s clutch production network with market demand. Discontinuing production in Sheffield and consolidating our clutch production operations will safeguard the competitiveness of our global clutch business and deliver benefits to our customers. Having said that, we are mindful of the consequences of these measures and will now do everything we can to work with our employees in Sheffield to develop fair solutions.”

Schaeffler committed to socially equitable implementation
It is intended to implement the announced measures in accordance with the principles of social equity to the largest possible extent over the period from 2025 to 2027. The company is now entering into statutory consultations with elected representatives for all employees at the locations affected and with its European Works Council.

Forward-looking statements and projections
Certain statements in this press release are forward-looking statements. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial consequences of the plans and events described herein. No one undertakes any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. You should not place any undue reliance on forward-looking statements which speak only as of the date of this press release. Statements contained in this press release regarding past trends or events should not be taken as representation that such trends or events will continue in the future. The cautionary statements set out above should be considered in connection with any subsequent written or oral forward-looking statements that Schaeffler, or persons acting on its behalf, may issue.