In a drastic move to adjust to the challenges of today’s market, ZF, The German supplier of car equipmenthas announced its intention to reduce up to 14,000 jobs in Germany by 2028.
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This measure represents a significant 25% reduction in its workforce in the countryreflecting the economic and competitive pressures facing the automotive industry, especially in the area of electric vehicles.
The company, known for being one of the leaders in the manufacture of automotive components, said the cuts will affect several areas, including production, administration, research and development.
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“The number of employees in Germany should progressively decrease to between 11,000 and 14,000 by 2028”ZF said in a statement. The transition to electric vehicles has proven more challenging than expected, with strong competition, cost pressure and low demand complicating the outlook for manufacturers.
The announcement comes at a critical time for the German automotive industry, a sector that has traditionally been a pillar of the country’s economy.
Competition from Asian suppliers has increased the pressure on companies such as ZFas automakers look to cut costs amid the transition to electrification.
Demand for electric vehicles, which initially showed strong growth, has declined in recent months due to several factors, including inflation, a lack of affordable models and Chinese competition. In addition, The end of public subsidies for the purchase of these vehicles in Germany has negatively affected sales.
The situation has forced ZF to make difficult decisions to remain competitive in a rapidly evolving market. “The gravity of the situation requires decisive measures to adapt the company to a more difficult market and competitive environment”ZF CEO Holger Klein said in the statement.
The company has already announced the closure of its factories in Gelsenkirchen by the end of 2024 and in Eitorf by 2027which underscores the need for restructuring.
ZF currently employs 54,000 people in Germany and 168,700 worldwide.operating in 31 countries. As the company grapples with these challenges, the reduction of its workforce in Germany is a reflection of the profound changes that the automotive industry is undergoing globally.
The pressure to innovate and reduce costs is intense, and suppliers like ZF are at the center of this tumult, trying to balance the need for competitiveness with maintaining a robust workforce.
ZF’s future will depend on its ability to adapt to the new demands of the electric vehicle market, where efficiency and innovation are crucial.
The company will need to navigate these challenges while facing increased international competition and an uncertain economic environment. The downsizing is just one part of a broader strategy to ensure its survival and success in the years ahead.