© Schaeffler
General |
Schaeffler launches efficiency program – layoffs awaits
During its annual press conference, German Schaeffler AG announced its program RACE, which is designed to sustainably increase the Automotive OEM division’s efficiency and optimise its portfolio.
The RACE program – which stands for “Regroup Automotive for higher Margin and Capital Efficiency” – consists of three stages. The initial stage of the program, which started on January 1, 2019, covers the next 18 to 24 months.
Schaeffler says the program was made necessary by a number of external and internal factors that had significantly weakened the division’s EBIT margin before special items for 2018. The company is now looking to sustainably improve the margin over the next three to four years and to generate an EBIT margin percentage in the high single digits going forward.
The division plans to achieve this margin improvement by optimizing the footprint in Europe as well as its business portfolio, reducing overhead costs, increasing R&D efficiency and capital efficiency as well as sustainably improving order intake.
The company says that these measures will affect all four business divisions (Engine Systems, Transmission Systems, E-Mobility, and Chassis Systems) as well as the corporate functions internal and external to the division and will primarily impact Europe.
As part of the first stage of program RACE, the division plans to further consolidate its European plant network. This will likely affect five European locations where the Automotive OEM division maintains production sites. In light of this, the consolidation will primarily involve disposing of or combining activities. The company is currently anticipating that these changes will result in a reduction by about 900 positions, including about 700 positions in Germany. These numbers include the disposal of non-core activities in the Engine and Transmission Systems business divisions.
The R&D ratio (R&D expenditures as a percentage of sales) of the Automotive OEM division will be restricted to 8 – 8.5 percent in 2019 and 2020. Finally, the division will increase its order intake in the E-Mobility and chassis mechatronics units to EUR 1.5 billion to EUR 2 billion per annum over the next three years.
