Andreas Wolf unveils the new Vitesco Technologies logo
The head of Continentals Drive division must make the company more profitable.
(Photo: Vitesco Technologies)
Dusseldorf, Frankfurt Andreas Wolf has probably the heaviest job in the supplier industry. He is head of Continental’s propulsion division, which since October 1 is called Vitesco Technologies. The first part of the name is derived from the Latin “vita”, which translated means “life”, the corporation announced in a letter. For the Hanoverian supplier, this stands for “energy, speed and agility” – the qualities that make Wolf’s job so difficult. Because this is exactly what the company from Regensburg does not have.
“It’s much faster and more radical towards electrification than anyone thought,” says Wolf Handelsblatt. His conclusion: “There will be no renaissance of the internal combustion engine.”
This change is also driven by Volkswagen. The car manufacturer from Wolfsburg has made a clear commitment to electric mobility and is investing billions in new e-cars. For Continental, this may have increased the pressure to electrify the product portfolio.
Hardly any area in the supplier industry is facing such profound changes as the drive segment. According to a study by the analysis firm Evercore ISI, drive companies such as Vitesco Technologies will have to undergo such a change over the next ten years that they have never experienced before in automotive history – the change from internal combustion engine to electromobility,
Engine component suppliers must therefore complete or restructure their diesel and gasoline engine parts within a few years and replace old personnel with new equipment as software and electronics replace mechanics.
Auto analyst Felix Mogge from consulting firm Roland Berger sees this as a daunting task. “Making development teams of pure combustion engines fit for the era of electromobility is a big challenge,” he says. In addition, the effort to convert internal combustion engines into electric motor factories was considerable. “Completely different components have to be manufactured, the system technology is different and the production cycles have to be adapted,” says the car expert.
Infographic: Diesel against petrol engine
The recently published by Continental savings program shows what impact this shift will have on the industry. Worldwide, over the next ten years 20,000 jobs at the supplier are affected by the changes in the industry. Alone in Germany it is 7000. How many people will lose their jobs in this phase of consolidation is unclear.
Also with the competitors Bosch and ZF the employees in the combustion engine factories have to worry about their jobs. Trade unions and workforces of the country’s largest suppliers are nervous, demonstrations are already being prepared or have already taken place in some locations, as in the case of ZF in Friedrichshafen,
The suppliers are not entirely innocent of the current situation, For too long, they delayed the shift to electromobility because diesel and gasoline margins were simply too tempting and global economic growth seemed to have no end. “Continental would have had to start restructuring its powertrain much earlier,” says Jürgen Pieper, auto analyst at Bankhaus Metzler.
Now, however, socially motivated and politically required environmental standards are affecting suppliers at a time when the economy is no longer helping. Automotive sales are collapsing, with global auto production expected to fall five percent this year. For the powertrains of Bosch and ZF and for Vitesco Technologies, the challenge could hardly be greater at the moment.
Savings program meets drive plants
Announced the release of the second quarter figures Continental Therefore, a surprising decision: Certain components for internal combustion engines will no longer develop the supplier, no longer accept further orders. A few months later, the austerity program followed, which was expected to affect mainly the drive employees.
The plant in the Bavarian Roding with 540 employees is under the Protest by the IG Metall and the Bavarian Minister of Economic Affairs Hubert Aiwanger closed, as well as the drive unit in Newport News in the USAwhere almost 740 digits disappear. Employees at the Limbach plant in Saxony have to expect tough cuts, and 500 of the 940 jobs in Italy are in fire in Pisa, Italy. Hydraulic components for diesel and petrol engines are manufactured in all the plants mentioned.
And that should not be the end of the package of measures yet. In the announcement of the austerity program, the Group stated that “all other projects beyond those mentioned above will be elaborated in detail and subsequently announced throughout the life of the structural program”. The structural program is designed for a period of ten years.