Schaeffler accelerates transformation and strengthens competitiveness

• Board of Managing Directors adopts additional structural measures to further transform the Schaeffler Group and strengthen competitiveness • Package of measures with two broad aims: (1) downsize capacity and consolidate locations and (2) strengthen competitiveness and expand local capabilities • Plans include net workforce reduction by 4,400 in Germany and Europe by the end of 2022, focusing mainly on twelve locations in Germany and two elsewhere in Europe • Sites in Herzogenaurach, Bühl, Schweinfurt, Langen and Höchstadt to be strengthened by clustering technology and production capabilities and investing in future growth areas • Potential annual savings of 250–300 million euros to be 90 percent realized by 2023, transformation costs of about 700 million euros • Socially responsible implementation on the basis of 2018 Future Accord

September 09, 2020

Global automotive and industrial supplier Schaeffler today announced measures that continue to build on changes initiated in 2018. Back then, in recognition of looming technological and regulatory developments and changing customer requirements, the company began adjusting its European production footprint in order to streamline its structures and align them more closely with divisional requirements. As part of that process, the company downsized its footprint in the United Kingdom by exiting three of its sites in November 2018. In early 2019, Schaeffler established an efficiency program (RACE) in its Automotive OEM division, followed that same year by the GRIP and FIT efficiency programs in its Automotive Aftermarket and Industrial divisions, respectively. The RACE program has since led to the sale of three of the company’s automotive sites: Hamm, Una, and Kaltennordheim. In September 2019 – before the COVID-19 crisis had even emerged – the company launched an additional voluntary exit program, which is currently being implemented.

The Schaeffler Group’s employee numbers have decreased from 92,478 at the end of 2018 to 84,223 at the end of June 2020, a reduction of just over 8,250, or about 9 percent of its workforce. However, at this stage the company’s employee numbers only partially reflect the measures undertaken.

Potential savings of 250–300 million euros, freed-up capital to be reinvested in future projects in Germany

It is envisaged that the package of measures will yield potential savings of 250–300 million euros annually, of which 90 percent is expected to be realized by 2023. About half of these savings are expected to come from the Automotive OEM and Industrial divisions, with the Automotive Aftermarket division contributing only a minor share. The measures will generate transformation expenditures of about 700 million euros, most of which is expected to be recognized as a provision in the financial statements for 2020. The capital freed up as a result of implementing the package of measures presented today will be reinvested in key growth areas of business and technology in Germany.

Socially responsible implementation on the basis of Future Accord

The package of measures will be implemented in a socially responsible manner on the basis of the Future Accord signed between Schaeffler and the IG Metall trade union in 2018. The company is currently engaged in constructive dialog with employee representatives with the aim of implementing the structural measures using a diverse mix of tools.

“We moved early to take all steps necessary to overcome the current crisis,” said Klaus Rosenfeld, CEO of Schaeffler AG. “However, in light of market developments, further measures are now unavoidable in order to improve the Schaeffler Group's long-term competitiveness and ability to realize future opportunities. The package announced today by the Board of Managing Directors will help our company achieve these aims.” Regarding the means of implementation, Rosenfeld said, “We, on the Board of Managing Directors, are committed to ensuring that the transformation of the Schaeffler Group proceeds wherever possible in accordance with the principles of social responsibility and partnership. That’s why we signed a future accord in 2018, and that deal still stands. We’re a family business, so we know just how vital that is to achieving successful change and transformation at Schaeffler.”