Shifts in the automotive market have been felt by manufacturers, and companies like EBC Brakes, who are all being forced to reevaluate their operations in order to keep up with the changing environment.
Even Continental AG, the world’s second-largest auto parts manufacturer is feeling the heat, and it’s responded with a massive restructuring and cost cutting project.
The company will be investing about US$1.2bn from 2019 to 2029 in order to reduce company gross costs by €500mn annually by 2023, as detailed by a company statement issued earlier, on September 25. The car parts manufacturer has about 244,000 employees in 60 countries.
Earlier in August 2019, Continental went on record saying that they have plans for a comprehensive restructuring of the company, which includes job cuts as well as the closure of factories. Said plans also has the company stopping certain projects and efforts for corporate growth, like their hydraulic components business, which manufacture injectors and pumps for diesel and gas engines. On top of that, the company is also reviewing the company’s operations responsible for the creation of components for exhaust-gas treatment and fuel-supply systems.
Many are saying that Continental AG’s strategy emphasizes how auto part manufacturers, like EBC Brakes, need to adapt to the industry’s rapid changes. China and Europe have implemented stricter emission standards, which, in turn, have forced auto manufacturers to shift their focus towards EVs, when the market is slowing down considerably following a decade of stable growth.
Continental is in a good spot, relatively speaking, thanks to having a presence in the electronic component industry. However, the auto parts industry has been hit with a lot of profit warnings in the months of 2019, with many smaller scale businesses, those more specialized towards combustion-engines and their components, getting hit hard.
Major auto manufacturers are saying that the market isn’t in a good spot right now, reinforced by the recent developments in the industry. Notably, Volkswagen AG and BMW AG both revealed plans to cut down on production to better align with current demand levels in the market, as well as to avoid having inventory buildup.