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September 02, 2020 09:12 AM

Conti doubles annual savings target to more than $1B by 2023, affecting 30,000 jobs

European Rubber Journal
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    HANOVER, Germany — Continental A.G. is expanding the structural program it has laid out for the coming decade with additional measures to cut costs and increase efficiency.

    The goal, it said, is to achieve gross annual savings of more than $1.1 billion from 2023 onwards, double what it previously disclosed, and it could include the divestiture of underperforming businesses.

    "That is a huge number," Ariane Reinhart, Continental's executive board member for human relations, said in a video statement. "It will demand a lot from us in the short term and push us to our limits. All business units will be called on to contribute in Germany and aboard."

    Overall, Continental expects the restructuring to affect more than 30,000 jobs — via role modifications, relocations or redundancies — directly worldwide in the future.

    About 13,000 of those jobs are located in Germany, with an additional large percentage in countries with high labor costs, the company said. Continental employs more than 232,000 worldwide, including about 59,000 in Germany.

    The group originally announced measures in September 2019 that would have impacted up to 20,000 jobs worldwide, including some 7,000 in Germany.

    Regarding negotiations with relevant labor unions in Germany, Ms Reinhart, said: "The exploratory talks we have been holding for some time in Germany are now entering a decisive phase. The more we all save intelligently when it comes to costs in the long term, the more jobs we will safeguard together in the medium and long term."

    All central functions and business units will now be impacted under the strategy, which includes "the bundling of production, R&D tasks at the most competitive locations worldwide as well as portfolio adjustments."

    The job reduction goals do not take into account the number of jobs that will be created by "contrary positive effects" in the coming years, which includes targeted growth in the future fields of mobility, such as technologies and software for digitalization, assisted and automated driving as well as zero-emission mobility, the firm said.

    Continental also is pushing ahead with the automation of its processes, with Industry 4.0, for instance, as well as providing greater work flexibility and cutting labor costs.

    "Furthermore, business operations that are persistently unprofitable are to be sold," the group stated.

    The intensified restructuring reflects "persistently low global vehicle production as well as the deepening economic crisis as a result of the coronavirus pandemic."

    Continental's management does not expect vehicle production to return to the pre-crisis levels before 2025.

    "The entire automotive industry is currently faced with enormous challenges. It has not experienced a larger, more severe crisis in the past 70 years," Continental CEO Elmar Degenhart said.

    The crisis is hitting suppliers particularly hard, Mr. Degenhart added, saying, "It will demand a lot from us in the short-term and push us to our limits in the coming years.

    "Our aim is to maintain our position among the global elite when it comes to the providers of top technologies and top software for mobility."

    The measures, he said, "will give us sufficient room to maneuver and the vital resources we need to return to fast, profitable and sustainable growth with the relevant future technologies."

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