Forvia, a major supplier to prominent automotive manufacturers such as Tesla, Stellantis, Volkswagen and Ford, has announced its intention to reduce its workforce in Europe by up to 10,000 jobs over the next five years. This news comes shortly after Continental, another significant auto supplier, revealed plans to cut 7,150 jobs.
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As the eighth-largest automotive supplier globally, Forvia aims to shrink its current workforce of 75,500 by 13 percent. Job cuts will be implemented at Hella, its subsidiary responsible for manufacturing lighting and other automobile components. The company’s objective is to enhance cost-efficiency and competitiveness through its new “EU-Forward” plan, as reported by Le Monde.
Challenges despite profitability
Forvia, formed after the acquisition of German auto supplier Hella by Faurecia, reported sales of €27.25 billion ($29.42 billion) for 2023, compared to €24.57 billion ($26.53 billion) in the previous year. While it has returned to profitability following the impact of COVID-19, the company still carries a debt burden. Forvia is headquartered in Nanterre, France. It specializes in producing interiors, exhaust systems, headlights, and other automotive equipment.
This strategic move is aimed at reducing the company’s reliance on China, where it currently generates 27 percent of its sales and the majority of its earnings.
Forvia’s job cuts will be distributed across several European countries, including France, Germany, Poland, Spain, and the Czech Republic. However, the company has cautioned that the impact will not be uniform across all sites.
During a press conference, Forvia CFO Olivier Durand stated, “It’s going to affect all sites, but not in the same way. We’ve witnessed a decline in the European market, and we don’t foresee any short or medium-term improvement. Additionally, we have several sites that are not operating at full capacity.”
Job reductions through attrition and reduced recruitment efforts
The Tesla supplier plans to achieve the job reductions through attrition and a significant reduction in recruitment efforts throughout Europe. Durand clarified that the plan does not necessarily entail laying off 10,000 individuals since their attrition rate ranges from 2,000 to 2,500 people per year.
The “EU-Forward” plan will be presented to trade unions. It aims to emphasize the acceleration of AI implementation. Additionally, it focuses on optimizing research and development investments and costs. Furthermore, the plan aims to foster the development of new technologies.
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