20,000 jobs and six plants threatened at German tire maker Continental

Marianne Arens

The auto supplier and tire manufacturer Continental plans to cut at least 20,000 jobs over the next 10 years and close five plants worldwide. The company plans to wipe out 15,000 jobs by 2024 and has not ruled out compulsory redundancies.

The company’s executive announced what is alleged to be its biggest ever reorganisation on September 25 following a supervisory board meeting in Hanover. According to the announcement the company plans to invest more than €1 billion in software development and electro-mobility. However, the board also made crystal clear that employees will have to pay for the conversion in production. The slashing of 20,000 jobs, or 8 percent of company’s current workforce of 244,000, is expected to reduce gross expenditure by €500 million each year from 2023 onwards.

Six Continental factories are to be closed worldwide. These include the plant in Roding (Upper Palatinate, Bavaria) with 540 employees and in Limbach-Oberfrohna (Saxony) with 1,230 employees, the factory in Pisa (Italy) with almost 1,000 workers, a plant in Malaysia and two factories in the United States. The two US plants are in Newport News, Virginia (740 employees) and Henderson, North Carolina (650 jobs). In Malaysia, 270 workers are affected at the Continental plant in Petaling Jaya.

At the Babenhausen site in Hesse, 2,250 out of a total of 3,600 jobs are to be cut. In order to “reduce costs in development to a competitive level” (as stated in a company press release), research and development activities are to be withdrawn from the location.

With its attack on jobs, the company is reacting, as the press release states, to “the decline in global auto production.” The company’s “Strategy 2030” took into account “several parallel developments: an increasingly digitised world of work, the looming crisis in the auto industry and the accelerated technology change in the motor sector due to stricter emissions legislation.”

Additional major factors playing a role are the upcoming Brexit and trade war with the US. German car exports to the US and China fell by over 20 percent in the first half of 2019. “We are not slipping into the crisis, we are in the middle of it,” complained Continental CEO, Elmar Degenhart, on the sidelines of the IAA Motor Show.

For the past 10 years, the group has been controlled by the super-rich Schaeffler family, which holds 46 percent of shares and is majority shareholder. The board’s response to the global crisis follows a well-known pattern: workers must suffer in order to rescue share prices and profits.

To this end companies such as Continental have been able to rely for decades on the services of the two German unions, IG Metall (IGM) and IG Chemie.

Following the recent meeting of the supervisory board, IGM board member Christiane Benner said that the company’s so-called “employee representatives” had “not agreed to close sites in Germany.” On the supervisory board they had merely supported “an open-ended audit.” Benner is the deputy chairman of the Continental supervisory board and takes home over €200,000 a year. The money allegedly benefits the union-friendly Heinrich Böckler Foundation.