Forvia, one of the major suppliers for leading automakers such as Stellantis, Volkswagen, Tesla, and Ford, has announced plans to cut up to 10,000 jobs in Europe over the next five years. This news comes shortly after Continental, another major auto supplier, revealed its decision to reduce its workforce by 7,150 jobs. These moves reflect the ongoing restructuring within the automotive industry as companies adapt to changing market dynamics and the transition to electric vehicles.
As the eighth-largest automotive supplier globally, Forvia aims to shrink its current workforce of 75,500 by 13%. This reduction will include job cuts at Hella, its subsidiary that specializes in manufacturing lighting and other automotive parts. The company’s new strategy, known as “EU-Forward,” is designed to enhance competitiveness and reduce costs. Despite reporting sales of €27.25 billion in 2023, an increase from the previous year’s €24.57 billion, Forvia remains in debt. The company has managed to return to profitability following the impact of the COVID-19 pandemic but recognizes the need for further restructuring.
Headquartered in Nanterre, France, Forvia is involved in the production of various automotive components such as interiors, exhaust systems, and headlights. The planned job cuts are part of a broader effort to reduce reliance on China, which currently accounts for 27% of Forvia’s sales and a significant portion of its earnings. By diversifying its operations and reducing dependence on a single market, Forvia aims to strengthen its position in the industry.
The job cuts will be spread across several European countries, including France, Germany, Poland, Spain, and the Czech Republic. However, Forvia has emphasized that all sites will be affected equally. Olivier Durand, the company’s CFO, explained during a press conference that the European market has experienced a downturn with no foreseeable progress in the short or medium term. Additionally, several sites are operating below full capacity. While the job cuts will be implemented over the next five years, Forvia intends to achieve a significant portion of the reduction through attrition and reduced recruitment, rather than direct layoffs.
The “EU-Forward” plan, which focuses on accelerating the deployment of artificial intelligence (AI), optimizing research and development (R&D) investments and costs, and developing new technologies, will be presented to trade unions for discussion. Forvia aims to achieve sales between €27.5 and €28.5 billion for this year.
The automotive industry is currently undergoing significant restructuring as automakers shift their production focus towards electric vehicles (EVs). This transition has resulted in excess capacity for suppliers like Forvia, particularly in areas such as seating, interiors, and lighting. The situation has created an advantage for China, where Forvia generates a substantial portion of its sales and earnings. Other major suppliers, including Continental, Bosch, and ZF Friedrichshafen, have also announced staff reductions in response to these market changes. ZF Friedrichshafen has even indicated the possibility of reducing its total staff by up to 20%. The slower-than-expected adoption of EVs and historically low car sales have impacted the automotive supplier market, leading to job cuts and financial challenges. For example, ZF reported a net debt of €11.5 billion in June last year, resulting in the elimination of approximately 800 jobs.
In conclusion, Forvia’s decision to cut 10,000 jobs in Europe over the next five years reflects the ongoing restructuring within the automotive industry. The company aims to reduce its reliance on China while improving competitiveness and reducing costs. By implementing the “EU-Forward” plan, Forvia seeks to accelerate the deployment of AI, optimize R&D investments and costs, and develop new technologies. These measures are essential for navigating the industry’s transition to electric vehicles and addressing the challenges posed by excess capacity and slower market uptake.
