ZF's every fourth employee to leave: Anticipated mass protests over the decision
ZF Employees Protest Against Cost-Cutting Measures and Potential Division Restructuring
The workforce of automotive supplier ZF is protesting against cost-cutting measures, particularly the potential restructuring of Division E (the powertrain division). The protests, which are expected to take place at ZF's headquarters in Friedrichshafen on Tuesday with around 4,000 participants, come as the company is undergoing a large-scale strategic restructuring.
ZF is aiming to cut up to 14,000 jobs in Germany by 2028, driven by sustained losses, heavy debt, and the need to pivot towards software-defined vehicles (SDV), electrification, and improved profitability. Division E is the main cause of ZF’s financial difficulties, as almost all of its products are making a loss.
The restructuring aims to improve profitability, operational efficiency, and competitiveness amid challenges such as weak EV demand, tariff uncertainties, and intense competition from peers like Bosch and Continental. Division E is particularly affected due to heavy losses, insufficient demand for electric drives, low pricing on traditional transmissions and hybrid parts, and nearly €10 billion in debt burdening the division.
Thousands of employees at multiple Division E sites have protested the impending cuts ahead of critical supervisory board discussions. The company and works council have agreed on a restructuring roadmap for Division E, aiming to finalize specific measures by September 30, 2025, but details remain confidential until then.
While no concrete public announcements on outsourcing have been made, industry insiders indicate all scenarios for Division E’s restructuring involve severe downsizing and potentially radical operational changes to safeguard ZF’s future. ZF has spun off other parts like ZF LIFETEC and entered joint ventures to enhance agility in new tech areas, so outsourcing or divestment of unprofitable units within Division E cannot be ruled out but awaits official confirmation.
The supervisory board would first have to approve a restructuring of Division E. The management of ZF is scheduled to make decisions today, Tuesday, during a supervisory board meeting. The most important issue to be discussed is the realignment of the powertrain division, Division E. The protests were triggered by ZF's austerity course under CEO Holger Klein, which includes potential pay cuts and dismissals. Protests are also taking place in Schweinfurt, Saarbrücken, and Nuremberg.
In the worst-case scenario, Saarbrücken could be particularly affected by the personnel cuts, and it could close completely. The supervisory board meeting is expected to decide on the future of the company. On Thursday, ZF will publish its half-year results, providing more insights into the company's financial situation and the rationale behind the proposed restructuring measures.
- What about the future of Division E, history may repeat itself, as the automotive, finance, and transportation industries are all watching ZF's potential division restructuring closely, given its significant debt and insufficient EV demand.
- The business world is curious to see if ZF's strategies for improvement, including cost-cutting measures, outsourcing, and the focus on software-defined vehicles and electrification, will help prevent further losses and financial difficulties in the automotive industry.
- As thousands of employees continue their protests against potential job losses, the decision made today during the supervisory board meeting regarding the restructuring of Division E could have far-reaching implications for both ZF and the entire transportation sector.
