ZF Friedrichshafen's CEO Wolf-Henning Scheider wrote in an email memo to the company's employees, "As a result of the demand freeze on the customer side, our company will make heavy financial losses in 2020. These losses threaten our financial independence."
The prolonged economic slowdown had already been impacting the auto sector and 2019 had already witnessed several layoffs. Now the pandemic has further impacted the sector negatively. Like many other companies, ZF is also not very optimistic about the remaining year. In fact, as per the email note shared by its CEO, the company is not expecting business growth for about a couple of years.
To keep up and manage the crisis and financial turbulence, ZF would be looking to cut some costs. As a result, the German auto component manufacture plans to cut up to 15,000 jobs by 2025, which accounts for around 10 percent of the company's total workforce.
Half of these 15,000 job cuts are expected to be in Germany alone, claims the report. By the end of 2019, ZF had 147,797 employees across the world.
ZF is not alone, other companies in the auto sector have also started making job cuts now.
French automobile giant Renault has also announced the job cuts for around 15,000 employees across the world. It would affect around 10 percent of Renault's 180,000 strong global workforce and nearly 4,600 Renault employees in France will lose their jobs.
As the global economic slowdown is only expected to worsen due to pandemic, and the consumer demand could see a further slump, the auto sector may witness more layoffs. The times are tough for each and every sector, in one way or the other. With relaxations now imposed in some parts of the world and some countries like New Zealand showing positive signs with zero cases of COVID-19, the situation might get slightly better. However, the economy will take some time to bounce back and both consumers and businesses will spend the money more consciously for atleast a couple of years.