An overview of the most important questions and answers regarding the necessary realignment of lighting production at the Lippstadt site.

Wednesday 26.06.2024

FORVIA HELLA today announced structural measures aiming at making the lighting production in Lippstadt competitive for the future. On the one hand, the site's portfolio is to be specialized in the production of the most innovative headlamps; on the other hand, it is planned to reduce around 420 permanent staff positions at the plant. The most important questions and answers are summarized below:

Why are now jobs being reduced in plant 2?

To strengthen our competitiveness, we are realigning the lighting production in Lippstadt. One reason is the structural changes in the European market environment. These are fundamental and we expect them to continue in the longer term. They will further deteriorate the already challenging situation at Plant 2. Secondly, despite intensive efforts in recent years, it has not been possible to lift the plant to the level of productivity and performance that we need to generate sufficient profitable new business for the plant. The fact is that the plant is currently making losses: 50 million euros in the last two years alone.

To earn money, we would have to offer customers new projects at significantly higher prices in the current set-up of the plant. However, this would make us uncompetitive against current and future competition; it would not be economically feasible to win new orders for Plant 2.

WWe must now systematically realign the plant: We must specialize it technologically, increase productivity levels and reduce the overall cost base. This is the only way that the plant can gain a sufficient volume of profitable new business, and it is the only way that we can position the site competitively for the future against the backdrop of significantly changing market conditions.

The realignment therefore offers Plant 2 a real perspective.

How many, in which areas and to what extent are positions to be cut?

Overall, we are planning to reduce around 420 permanent jobs in the lighting production at Plant 2. This also means that we will gradually reduce the use of temporary workers in lighting production at the plant.

The necessary personnel adjustments are to be made by mid-2026 at the latest and shall be implemented as socially responsible as possible. To this end, we will enter into talks with employee representatives in due course, where further details will be worked out.

We hope that we can minimize the period of uncertainty for the employees affected and find a solution that works for all sides together with the employee representatives.

How was the number of the planned headcount reduction for the lighting production in Lippstadt generated? How is the number put together?

The necessary reduction in jobs is a result of specializing the plant to the production of the most innovative headlamp technologies and the respective relocation of the interior lighting package, rear and body lighting projects and post-series projects to other plants, as well as the planned measures to increase productivity and reduce overcapacity. This realignment of the plant forms the basis for being able to offer profitable and competitive projects out of Plant 2 in the future and to win sufficient orders.

Will there also be job cuts at other locations?

In terms of structural measures, the focus is currently on the lighting production at the Lippstadt site. Nevertheless, it is particularly important for the other German and European locations to maintain a high level of competitiveness in order to be able to compete in the market in the long term in the face of increasing cost pressure.

What does the "new normal" look like from FORVIA HELLA's perspective – in terms of market size in Europe, competition and the market behavior of automotive manufacturers?

Forecasts for Europe currently predict that just 16 to 17 million vehicles will be produced in 2025 – 3 to 4 million less than were expected in 2020. This is almost as many as the total number of vehicles produced in Germany (around 4 million in 2023). We also expect the European market to stagnate at a level of around 17 million vehicles by 2030.

However, the low volumes are only one factor exacerbating competitive pressure. Secondly, we expect costs to remain high – in particular due to persistently high material, energy and labor costs. Supply chains will also remain volatile. Thirdly, customer and supplier structures will change significantly. Chinese manufacturers and suppliers will also continue to gain a foothold in Europe. We will have to compete with their lower cost levels in the future.

All in all, this will drastically intensify the already high cost and competitive pressure in Europe. These changes in the European market environment are fundamental and we expect them to continue in the longer term.