Auto and industrial supplier Schaeffler will cut off 500 jobs at its industrial division after its profit went down 2% because of slow delivery chains and overly centralized sales operations.
The majority of these jobs is in Germany and other European countries and will cease to exist by the end of 2017. The German company, which at the moment has 83,774 employees, said it would avoid forced layoffs and plant closures. In the first half of this year, operating earnings at the company’s industrial unit went down 1.7% to $190 million. This unit is in charge of manufacturing ball bearings for products like autos, tools, planes, and so on.
Three quarters of Schaeffer’s sales come from its car business, which led to a growth of 3.2% in the first six months of 2015, up to around $726 million. Schaeffer gets 60% of its revenue from car registrations in Europe, and in June this year the company witnessed the fastest monthly rate growth in new car purchases since 2009 due to low interest rates and a decrease in unemployment.
The German brand is also putting up a new European distribution center and will give more responsibilities to its regional sales branches in order to reply to its customers’ needs at a fast pace. Stefan Spindler, chief of Schaeffler’s industrial unit explained that this is part of the company’s strategy to increase profitability and sustain sales growth with an alignment between its industrial business and customer & market needs. The group expressed its plan for this year for sales to see an increase of 5-7% compared to 8.2% in 2014 and to have an operating margin of 12-13%, close to 12.6% it had last year.
By Gabriela Florea