Schaeffler to close five European sites as 3,460 jobs come under threat

A factory making automotive components can have orders from major carmakers and still find itself facing closure. That is the situation at German supplier Schaeffler, which plans to cut 3,460 jobs and shut five sites across Europe. The company is reducing its workforce because demand for some of its products has weakened, particularly components used in petrol and diesel vehicles. At the same time, the shift to electric vehicles has not happened as quickly as many suppliers had expected.

Germany will bear most of the job losses, with approximately 2,660 positions affected. Four sites are on the closure list: Dortmund, Morbach, Berlin and Schwalbach. The fifth is in Herstal, Belgium. The changes are expected to be implemented by 2028. Schaeffler supplies components to vehicle manufacturers, including BMW, Mercedes-Benz and Volkswagen. Its products include bearings, powertrain systems and components for electric vehicles.

The cuts go beyond factory floors

Production workers account for about half of the planned job reductions. Research and development positions make up around 30%, while the remaining 20% will come from other departments. The company is also changing operations at facilities that are not closing. It plans to stop toolmaking at Höchstadt and adjust special machinery production in Erlangen and Schweinfurt.

The reduction in engineering and development roles is worth noting. Suppliers need these teams to design and test components for new vehicles. Cutting positions in these departments suggests that Schaeffler is reviewing more than its factory costs. For employees at the affected locations, the announcement means uncertainty about their future. Smaller companies providing transport, maintenance, materials and other services to the factories could also lose business if operations are moved or stopped.

Saving €300 million will come at a cost

Schaeffler expects the changes to reduce its annual costs by approximately €300 million by 2030. It estimates that implementing the programme will cost around €480 million, with most of that expense expected to be recorded in 2026. The company has said it will consult employee representatives on the reductions. Voluntary salary cuts are also being considered, starting with the management board. The financial benefit will take time to materialise. In the meantime, Schaeffler must pay for the restructuring while continuing to supply its vehicle manufacturing customers.

The problem facing automotive suppliers

Schaeffler's situation reflects a difficult position for companies that make parts for different types of vehicles. A supplier that has spent years producing engine components cannot automatically move that business into electric vehicle manufacturing. The equipment, technical skills and production processes are different. New products also require investment, and suppliers need orders from carmakers to justify that spending.

The slower growth in electric vehicle sales has made those decisions harder. Some companies expected demand to rise faster and invested in new production capacity. They are now dealing with weaker demand in parts of their traditional business while waiting for new electric vehicle orders to build. For suppliers, getting the timing wrong can be expensive. Maintaining factories that are not receiving enough orders costs money, but closing them also means losing production capacity and jobs.

What should South African suppliers take from this?

South Africa's automotive component manufacturers are connected to international vehicle production through local assembly plants and export programmes. Schaeffler has not announced that these European job cuts will affect its South African operations. There is no basis for assuming that the local workforce is part of this restructuring.

The wider issue, however, is relevant to local suppliers. Companies making components for conventional vehicles need to understand how long demand for those products is likely to last. Businesses hoping to supply electric vehicle manufacturers must also consider the cost of new equipment, skills and production technology. For smaller suppliers, these decisions are not easy to fund. Buying machinery or changing a production line requires money, and there is no guarantee that a new contract will follow.

Schaeffler's announcement puts a number on the pressure facing one of Europe's major automotive suppliers: 3,460 jobs and five sites. The more difficult question for the industry is how many other suppliers will have to make similar decisions as vehicle manufacturers change what they build and where they source their components.