Germany’s ZF Friedrichshafen is making moves to reduce expenses in order to boost competitiveness in response to weakened demand, joining the trend of auto-parts suppliers turning to cost-cutting measures amidst the industry’s embrace of electric vehicles.
Cost-Saving Goals
The German automotive supplier announced its plan on Wednesday to save a significant sum of 6 billion euros ($6.49 billion) between 2024 and 2025. This reduced cost base will provide ZF with the ability to navigate the industry’s anticipated transition to electric mobility starting in 2026 more effectively.
Industry-Wide Response
ZF’s decision falls in line with similar actions taken by other auto-parts suppliers within the European car industry. French company Forvia revealed plans to reduce up to 10,000 jobs, while Continental announced a workforce reduction of 7,150 employees last week, all in response to the slowing demand and increased investments in electric vehicles.
Implementation Strategies
In its effort to cut costs, ZF aims to optimize material purchases, enhance productivity at its plants, implement cost-saving measures in central functions, and thoroughly evaluate investments and their allocation.
Workforce Impact
Though reports suggest a potential reduction of 12,000 jobs at ZF in the upcoming years based on workforce demographics until 2030, the company has not confirmed this figure. However, any adjustments to the workforce will be made without any redundancies according to a company spokesperson.
Financial Performance
For the first half of the year ending in June, ZF reported revenue of EUR23.29 billion and earnings before interest and taxes of EUR555 million.