Schaeffler, Employee Representatives Agree Upon Cost Cuts

Schaeffler reports a “successful reconciliation” of its interests has been achieved. The company’s Executive Management Board and plant management representatives, in talks with labour representatives, have agreed upon a package of measures to reduce personnel costs at Schaeffler’s German locations. The total adjustment volume, required due to slack demand, amounts to €250 euros per annum. Schaeffler now reports these savings can be achieved through natural fluctuation, voluntary redundancies and partial retirement along with the continued use of short time work and reduced working hours including adjustment of salaries and wages.

According to the agreement, Schaeffler KG will not instigate any compulsory redundancies until June 30, 2010. It has also been possible to avoid cuts in one-off payments, the company adds. Schaeffler has made this announcement based upon the assumption that economic development has reached its lowest point and markets will slightly recover in 2010.

“We have succeeded in finding these well-balanced and socially acceptable provisions in good time. This is an important step towards cost adjustments to react appropriately to the lower sales level caused by the current economic situation,” said Dr. Jürgen Geißinger, Schaeffler Group president & CEO. “Now it is up to all of us to walk this path together and make our contributions to cost reduction. We can foresee that this path is not a comfortable one, but it will lead us to our goal.”

“The compromise takes into account the general economic conditions and keeps the burden for the employees as low as possible,” said Thomas Mölkner, chairman of the Herzogenaurach, Bavaria facility’s Works Council. “With this agreement we gain time for socially acceptable solutions.”

According to Schaeffler, both the Executive Management Board and the Works Council have emphasised that there is no alternative to cost adjustments due to the difficult worldwide economic situation. Both parties agree that further steps will need to be taken should the economic situation further deteriorate. In this case, it may not be possible to rule out the establishment of transfer companies and compulsory redundancies in 2010.

Schaeffler expects consolidated sales for 2009 to amount to approximately 7.5 billion euros as opposed to 8.9 billion euros last year. It assumes that the markets will not reach 2008 levels before 2012/13.