Auto parts supplier Forvia to cut staff in Europe

By

 AFP

French-German auto parts manufacturer Forvia announced plans to cut 13 percent of its workforce in Europe over the coming years in an effort to boost competitiveness and profitability in a sluggish and shifting car market.

The company, created in 2022 from the merger of France’s Faurecia and Germany’s Hella, returned to profit in 2023 but unveiled the plan to achieve 500 million euros ($540 million) in savings by 2028.

Forvia’s announcement follows job cuts announced by a number of its rivals as suppliers adjust to an auto industry that has yet to fully recover from the Covid pandemic but is also in the midst of shifting to electric vehicles that will eliminate the need for certain products like mufflers.

Forvia’s management said up to 10,000 of its 75,500 posts in Europe could go by 2028, with a lower recourse to interim staff and the use of Artificial Intelligence to optimise research and development.

In addition to France and Germany the company also has sites in the Czech Republic, Poland and Spain.

“All sites will be affected but not in the same manner,” Forvia’s chief operating officer Olivier Durand said at a news conference.

“We’ve had a drop in the European market and we don’t see an improvement in the short or medium term,” said Durand, adding that certain of Frovia’s facilities are not working at full capacity.

“Our industry shifts regularly and we know how to adjust our industrial capacity,” he added.

The plan also aims to make Forvia less dependent upon China, where it makes 27 percent of its sales but most of its profits.

The company posted a net profit of 222 million euros in 2023, with sales rising nearly 11 percent to 27.2 billion euros.

Forvia, which took on debt as part of its merger with Hella, reduced its debt by nearly one billion euros last year to nearly seven billion.

Investors welcomed the company’s announcement with Forvia’s shares rising 4.7 percent in early trading while the Paris SBF 120 index slid 0.3 percent lower.