German tire manufacturer and auto-parts supplier Continental AG on Sept. 25 said its 10-year restructuring program called Transformation 2019-2029 could affect up to 20,000 jobs globally.
The company's executive and supervisory boards met to outline a roadmap for the restructuring plan, which aims to focus on key growth areas in the future and increase productivity through organizational and portfolio adjustments.
Continental employs more than 244,000 workers globally. According to the release, the plan's impact on jobs will be in the form of layoffs and transfers. The company said around 7,000 of over 62,000 jobs in Germany will be affected throughout the course of the program.
As part of the plan, Continental's instrumentation and driver HMI business plans to gradually stop mass production at its Babenhausen, Germany facility by the end of 2025. The unit will also transfer some research and development activities from Babenhausen to other locations by the end of 2021.
In addition, the company plans to discontinue the production and development of hydraulic components for gasoline and diesel engines in Roding and Limbach-Oberfrohna, Germany, as well as in Pisa, Italy. It also expects to close its Newport News, Va. and Henderson, N.C. locations in the U.S. and discontinue truck tire production at its Petaling Jaya, Malaysia site.
Continental expects to spend about €1.1 billion for the structural revamp, with the bulk of the costs likely to be incurred between 2019 and 2022. The company intends to cut gross costs by about €500 million annually from 2023.
The Hanover-based automotive components supplier noted that the 10-year program will also involve expanding its software-based portfolio and creating "a large number of jobs" in the segment.
Continental also said it intends to reduce its dependence on the equipment business with automakers manufacturers by expanding its customer base across agriculture, railway engineering, mining and construction sectors. It is looking to raise the targeted consolidated sales share of these sectors to 40% from the current 30%.
"We see the technological upheaval in our industries first and foremost as a huge growth opportunity. With our structural program, we are also responding proactively to the crisis in the automotive industry and, like 10 years ago, we will emerge stronger," Continental CEO Elmar Degenhart said in a statement.
The revamp is part of Continental's Strategy 2030, which places greater focus on the company's electrified powertrains and related components business. Under the plan, Continental intends to cut investment in combustion engine parts and discontinue solid-state battery production.
