Discussion Between Works Council and Supervisory Board Regarding the Future of the Crisis Unit - Discussions between ZF and the works council concerning the future of the crisis management division
ZF, the German automotive supplier, is set to publish its half-year results on Thursday. The company, burdened by billions in debt, is pushing several cost-cutting programs and undergoing a comprehensive restructuring, especially at its Friedrichshafen core division in Germany.
The restructuring, the most extensive in the company's history, aims to improve profitability and competitiveness amid challenges such as stagnating vehicle production, slower ramp-up of electromobility, and rising costs due to factors like US tariffs.
Job Reductions and Impact on Powertrain Division
Since early 2024, ZF has cut over 11,200 full-time employees and secured partial or full retirements for another 4,700 people in Germany. The company plans to reduce up to 14,000 jobs by 2028, representing about one in four German positions in total.
The Electrified Powertrain Technologies division, accounting for 20% of ZF’s global workforce and 25% of sales, has been significantly affected by the restructuring. This division faces high R&D costs and slower-than-expected adoption of electric vehicles, prompting considerable cost-cutting and operational streamlining measures.
Restructuring Strategy and Engagement with Social Partners
ZF is combining its performance improvement programs across passenger cars and commercial vehicles into a permanent performance organization, extending this to the entire company. Corporate structures and individual product groups—including Electronics and Advanced Driver Assistance Systems (ADAS)—are being rigorously reviewed for profitability, with adjustments to the product portfolio anticipated.
The negotiations with IG Metall and the works council emphasize acting with social responsibility while acknowledging the tough road ahead. The goal is to balance operational efficiency with fairness to employees as much as possible.
Financial Context
Despite lower sales (€19.7 billion in H1 2025 vs. €22 billion in 2024), ZF has improved its adjusted EBIT margin from 3.5% to 4.4%. It maintains a strong liquidity buffer (€8.1 billion), providing stability as it implements these changes.
Rumors and Controversies
There have been rumors about plans to sell Division E or bring in a partner. However, the chairman of the works council, Achim Dietrich, stated that a spin-off or sale of Division E is not a strategy they can support. Division E, which generated nearly a quarter of the company's total revenue in 2024, covers electric, hybrid, and combustion engines, and employs about one in five ZF employees.
The supervisory board met on Wednesday to discuss the future of Division E, which is not competitive in some areas, particularly affected by the slow start of e-mobility. By the end of 2028, ZF aims to cut up to 14,000 jobs in Germany, which is roughly one in four ZF jobs in the country.
In conclusion, ZF’s restructuring measures at Friedrichshafen involve significant job cuts and organizational realignment, particularly impacting the powertrain division, as part of a broader strategy to enhance profitability and adapt to evolving automotive industry demands under close cooperation with the works council and IG Metall. The future of Division E remains a topic of discussion among the company's leadership and social partners.
[1] ZF Press Release, Q1 2025 Results, www.zf.com/en/investor-relations/financial-reports [2] Automotive News Europe, ZF to Cut 14,000 Jobs in Germany by 2028, www.autonews.com/eu-edition/zf-to-cut-14000-jobs-in-germany-by-2028 [3] Reuters, ZF to Cut 14,000 Jobs in Germany, www.reuters.com/business/autos-transportation/zf-to-cut-14000-jobs-in-germany-2025-05-06/
- As the restructuring of ZF progresses, there's an emphasis on vocational training within EC countries, as the company aims to reskill and upskill its workforce for the manufacturing industry, which is essential for the future of businesses and finance, such as the electromobility sector.
- With the changes within ZF, including the potential sale of Division E, the vocational training programs for various industry segments, like powertrains, electronics, and advanced driver assistance systems (ADAS), will play a key role in maintaining the company's competitive edge in the automotive industry.
