Due to the efforts of German automotive suppliers to cope with the transformation of automotive electrification, automotive parts supplier Bosch recently announced that it will carry out a large number of layoffs in two automotive transmission factories in Germany, namely Feuerbach and Schweiberdingen located in southwestern Germany. The plan to lay off 1500 employees will be completed by the end of 2025, with adjustments made to development, management, and sales personnel.
With the acceleration of the transition towards electric vehicles, Bosch is facing significant structural changes in the transmission sector.
For traditional fuel powered cars, “whoever gets the engine gets the whole vehicle.” The powertrain composed of the engine and gearbox directly determines the performance and quality of the car, which is the core lifeline of the car. For pure electric vehicles, the core powertrain has become a battery, motor, and electronic control system. Many electric vehicles use simpler single speed transmissions and require fewer parts than internal combustion engine vehicles. Transferring production usually requires a significant upfront investment, while new processes require fewer employees.
In addition to electrification transformation, Bosch also mentioned other challenges it faces, including global economic weakness and high energy and raw material costs.
Bosch is communicating with its employees and is considering ways to avoid mandatory layoffs, such as job transfers, early retirement, or voluntary layoffs. The company emphasizes that according to the recent agreement, there will be no mandatory layoffs in the upcoming layoffs. Bosch has negotiated with the labor management committee to discuss specific details, and has confirmed that the company will not engage in mandatory layoffs at its German operations location before the end of 2027, with approximately 80000 employees in the department.
According to the official website of Bosch, as of the end of 2022, Bosch Group had a total of 421000 employees worldwide, with a revenue of 88.2 billion euros and over 85500 technical research and development personnel.
According to the latest 2023 ranking released by Automotive News, Bosch has been the top global automotive component supplier for 12 consecutive years, while Denso, ZF, and Magna remain in the top four. In the ranking, the top 20 component companies come from countries such as Germany, Japan, the United States, South Korea, and France. Among them, German and Japanese component groups such as Bosch, Denso, ZF, Aisin Precision Machinery, Continental Group, Sumitomo Electric, Mahler, and Panasonic Automotive Systems occupy half of the market.
Bosch was only surpassed by Denso in 2010, and has consistently ranked first in other years, making it truly the world’s largest automotive parts supplier.
Bosch Group’s business is divided into four areas, including automotive and intelligent transportation technology, industrial technology, consumer goods, and energy and building technology.
Due to chip shortages and economic weakness, Bosch achieved growth in sales across all business segments in 2022. Among them, automotive and intelligent transportation technology achieved a 17% sales growth in 2022, reaching 52.6 billion euros, with a growth rate of 12% after adjusting for exchange rate effects, once again becoming the highest selling business segment.
Nevertheless, Bosch will still invest a significant amount of funds to support the research and development of future automotive technologies.
Dr. Markus Forschner, a member of the Board of Directors and Chief Financial Officer of Bosch Group, stated, “Although the sales growth of the automotive and intelligent transportation technology business segment is higher than the growth of automotive production, the profit margin is not optimistic, mainly due to the increase in supply chain costs and the impact of early investment in the transformation of the automotive and intelligent transportation technology business.”
Bosch achieved a 14% increase in sales in its industrial technology business, reaching 6.9 billion euros, with an 11% increase after adjusting for exchange rate effects.
In 2022, Bosch Group’s performance exceeded expectations. But Bosch Group invested over 12 billion euros last year to support future development, with R&D expenses increasing to 7.2 billion euros, accounting for 8.2% of sales; Capital expenditure reached 4.9 billion euros. In addition to initial investment, Bosch also invests a certain amount of funds to ensure excellent delivery capability in the face of significant uncertainty. This resulted in a negative free cash flow of 4 billion euros last year.
Bosch Group is restructuring its automotive and intelligent transportation technology business to adapt to the constantly changing market and customer needs. This is the second major change in Bosch’s business framework in the past two years. The first was in 2021 when Bosch established the “Intelligent Transportation Business” department. The current repetitive business will be renamed “Bosch Intelligent Transportation Business”, and “Bosch Intelligent Transportation Business” will continue to be subordinate to the Bosch Group. In terms of organizational structure, the business scope of some business units will be adjusted starting from January 1, 2024.
The intelligent transportation department has seven business units under its jurisdiction, namely electric drive systems, vehicle motion intelligent control, power systems, intelligent driving and control, automotive electronics, intelligent transportation after-sales, and Bosch automotive maintenance service network. All business units are assigned cross departmental responsibilities. After this restructuring, all business units will also be assigned cross departmental responsibilities.
Bosch expects the restructured intelligent transportation business to achieve global sales revenue of over 80 billion euros in 2029.
Bosch is vigorously expanding its automotive electronics business, and Bosch Group has signed a strategic cooperation agreement with NIO. The two sides will focus on cooperation in areas such as sensor technology, autonomous driving, motor control, and intelligent transportation systems.
In addition to Bosch, Continental Group also announced layoffs. Not long ago, Continental announced that in order to enhance competitiveness, administrative agencies will save 400 million euros in costs annually starting from 2025. Continental Group will lay off some positions in the automotive department and streamline the business and administrative structure from sales, research and development to production.
Post time: Dec-16-2023