German auto crisis deepens as supplier cuts over 3,000 jobs

German auto parts supplier Schaeffler announced plans on Tuesday to cut nearly 3,500 jobs and close five facilities across Europe due to a worsening crisis in the automotive industry. The company cited intense competition from Chinese manufacturers and a decline in demand for traditional combustion engine vehicles, particularly electric ones, as key factors behind the decision.

Roughly three-quarters of the 3,460 job cuts and four of five site closures are expected to occur in Germany, the nation with the world's largest economy.

The job reductions, to be phased in by 2028, account for around three percent of Schaeffler's global workforce of nearly 110,000 employees and are projected to yield annual savings of about 300 million euros ($336 million) starting in 2030. This move follows additional job cuts of 4,700 announced by Schaeffler in 2024. In a statement, the company attributed its response to the "persistently challenging environment" within the industry, characterized by a downturn in market activity, fierce competition, a slowdown in electric vehicle adoption, and delayed progress in electric mobility.

Schaeffler's cuts primarily target production and research and development operations. The company plans to close facilities in Berlin, Dortmund, and two other towns in western Germany, as well as a smaller site in Belgium, alongside job losses in France and Slovakia. To address workforce impacts, senior executives will accept temporary salary reductions as part of a "solidarity contribution" aimed at reducing costs across all levels of the organization.

While some job losses will be balanced by the creation of positions in emerging sectors like humanoid robotics and defense, the works council representing employees urged management to engage in constructive dialogue, emphasizing that cuts alone are insufficient to revive the company. Works council head Uli Schoepplein emphasized the need for innovative solutions, asking Schaeffler to outline clear business strategies, product lines, and technology developments for the future.

Although less prominent than major automakers such as Volkswagen, BMW, and Mercedes, Schaeffler plays a vital role within Germany's automotive supply chain, contributing to components ranging from braking systems to in-car electronics.