Automotive Business Massive Job Cuts at Automotive Supplier

In addition to the COVID-19 pandemic, the transformation of the automotive industry is currently causing many foundries problems. Now even a major automotive supplier like Nemak has to lay off numerous employees from its cylinder foundry in Wernigerode, Germany.

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As the German news portal Volksstimme.de reports, Nemak will have to cut around 180 jobs at its cylinder foundry in Wernigerode, Germany, in the fall of next year. This accounts for around one third of the local workforce. Nemak Managing Director Frank Lehmann cited the transformation in the automotive industry as the reason. Concrete triggers for the restructuring are the trend towards electromobility, which is being reinforced by the regulatory requirements of the legislator, and social discussions of environmental issues. As a result, major Nemak customers such as Volkswagen, Audi, Porsche and Daimler are no longer placing new or follow-up orders. This affects the demand for cylinder heads and cylinder blocks, which are produced for the automotive industry in the foundry in Wernigerode. The company calculates with a reduced order volume by a third by 2022.

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In addition, according to Lehmann, uneconomical orders with low unit numbers but high investment costs are leading to losses in production, which further worsen the current problems. Even if the corona pandemic has led to a worrying trend of insolvencies among foundries in the automotive sector, it is not the source of the problems, but merely the accelerator. According to Volksstimme.de, 700 employees were already on short-time working in 2019. In order to stabilize the company financially, 180 job cuts can now be expected. The details should be finalized by May 2021.

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