Job losses at European auto parts suppliers are set to more than double in 2024 as a slowdown in the continent’s auto industry takes a toll on their manufacturing supply chains.
Analysis provided to the Financial Times by the European Automotive Suppliers Association (Clepa) shows that more than 30,000 jobs will be lost across the industry in 2024, compared with just over 15,000 in 2023.
Job creation has also slowed, with more than 58,000 net job losses across Europe since 2020.
As new car sales by European manufacturers steadily decline, companies including French tire maker Michelin and German manufacturer Bosch announced thousands of job cuts last year, leaving suppliers with overcapacity and little prospect of a sales rebound.
While large companies have laid off workers and closed factories, some smaller businesses have been forced to go bankrupt or file for bankruptcy.
“If European manufacturers are no longer growing, then their equipment manufacturers are no longer growing either,” said Alexandre Marian, director of consulting firm AlixPartners.
According to Clepa, auto parts suppliers directly employ around 1.7 million people in the EU.
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The drop in demand comes in the wake of the Covid-19 pandemic, the war in Ukraine and subsequent inflation. These factors undermine the competitiveness of European industry as Chinese rivals strive to increase market share.
“We estimate that the small growth in the European market will be offset by the growth in imports, especially the growth in Chinese imports,” said Marc Mortureux, director general of the French Automotive and Mobility Industry Platform (PFA) industry body. .
He added that while European suppliers try to work with local Chinese auto groups, the biggest concern is that Chinese brands will end up assembling cars in Europe but using parts from China and other countries.
The relatively high cost of electric vehicles and reductions in car subsidies in countries such as Germany have limited their widespread adoption, meaning companies investing in these technologies are not seeing the demand they expected.
Clepa said that since 2020, the number of job losses related to internal combustion engines has far exceeded the number of job losses caused by the shift to electric vehicles. Clepa found that 4,680 jobs related to electric vehicle suppliers will be lost in 2024, more than 4,450 jobs will be added, a sign of a slowdown in the electric vehicle market.
European regulation is also a challenge for parts manufacturers supplying vehicles with conventional engines.
The European Commission will tighten carbon emissions rules for carmakers from 2025, and Brussels plans to stop selling new internal combustion engine cars in Europe in 2035.
Laurent Favre, chief executive of French supplier OPMobility, expects the company’s industry-leading fuel tank business to shrink in Europe as a result.
“We have about 10 factories in Europe that produce fuel tanks. Obviously their activities will be affected,” he said.
Favre and other industry figures have called for a reconsideration of the upcoming penalties. Although Germany will slash EV subsidies in 2023, Chancellor Olaf Scholz recently said in Brussels that the EU needs “incentives” for EVs and that taxes on car emissions should not “affect Financial liquidity of companies investing in the electric vehicle transition”.
German companies forced to close include seat maker Recaro, luxury car parts maker Walter Klein and ae Group, which makes light metal die-cast parts used in many car parts.
AE Chief Executive Christian Kleinjung said in August that restructuring attempts had not stemmed “the decline in demand from automakers.”
While electric vehicle sales are expected to increase, suppliers are preparing for a continued period of low growth, with some announcing long-term layoff plans. Klepa’s data does not include announced job losses for future years.
Forvia, a maker of dashboards, door panels and exhaust systems, said in February it would cut 10,000 jobs from its more than 75,000 employees in Europe by 2028.
In November, Michelin said it would close two French plants that make truck and van tires. The measure affects more than 1,200 employees and is due to “structural overcapacity” brought about by low-cost competition in Asia.
Stéphane Destugues, a representative of the metal workers of the French CFDT union, criticized automakers for excessively compressing costs in recent years, resulting in suppliers being unable to survive.
“It doesn’t allow suppliers to make the investments they should to protect jobs and prepare for the future,” he said.
For those investing, many are looking beyond Europe. OPMobility has a site in Austin, Texas, serving customers like Tesla and is opening a factory in China.
“We want to stay connected with our old customers, but we have to look for growth elsewhere. We don’t expect any significant growth in the European automotive industry over the next five years.
