Brose chalks out revival plan to enable sustained profitability

Brose will invest in innovative technologies, expand its international production network and improve cost structures as part of the Future Brose renewal program. The company has also largely concluded negotiations with the works councils in Germany on optimising the organisation and reducing headcount in a socially responsible way.

“We are focusing on three key areas for leverage to successfully position Brose for the future. We will strengthen entrepreneurship, offer exciting innovations to existing and new customers, as well as increase competitiveness in the long-term,” says Ulrich Schrickel, CEO of the Brose Group.

In an effort to promote entrepreneurial thinking and action taking, Brose is simplifying and automating processes in production and administration, flattening hierarchies, reorganising responsibilities and encouraging managers and employees at every level to assume responsibility. The new organisation will be deployed gradually from the beginning of next year and will have a clear focus on the market and operations.

“Competition in our business segments is getting tougher and tougher. At the same time, vehicle production will take years to recover from recent turmoil. This is why we must adjust our cost structures,” explains Schrickel. Experts assume that the global vehicle market will not reach 2017 levels until 2025 at the earliest. “To do this, we need to lay the groundwork now by increasing our efficiency – especially in Germany. This is even more important, as all of our competitors produce the majority of their products in lower-cost countries,” Schrickel adds. To remain competitive well into the future, the supplier is expanding its international presence in countries like China, Mexico, the Czech Republic and Serbia.

Socially responsible headcount reduction
A year ago, Brose announced that it intended to cut 2,000 jobs in Germany. This applies to production and administration. Over a period of twelve months, the company and employee representatives have engaged in intense negotiations and largely reached an agreement on the details of how these plans will be implemented. “We were able to come to an agreement with the works councils on socially responsible measures for reducing our headcount – which is not something to be taken for granted considering the current state of the global economy and the automotive industry,” said Schrickel.

Nearly 1,100 additional jobs are to be cut by the end of 2022, largely with the help of a severance program. Around 440 jobs will be reduced at the Coburg location. In Bamberg/Hallstadt this figure will be about 280 and in Würzburg around 180. In Wuppertal, where closure systems manufacturing will come to an end in 2024, an additional 35 jobs will be cut in administration alongside the 200 jobs to be cut in production. Jobs will also be cut abroad, particularly salaried positions. Country-specific measures are based on local conditions.

Growth opportunities arise from innovations
“Adjustment of HR capacities will enable profitable growth going forward. This will place us in the financial position we need to invest in future technologies and new business segments,” underscores Schrickel. “For example, we are connecting our solutions for vehicle access and the interior to create intelligent systems that enable an entirely new driving experience.” This year marked the first time that Brose received series production orders for radar sensors. The company uses radar for reliable collision protection for side doors that open automatically, for gesture recognition for hands-free opening and closing of liftgates and for monitoring the vehicle interior. The supplier also wants to benefit from the trend towards electrically powered mobility with its drives for electric two-wheelers. The company is creating new jobs in growth areas and is still recruiting qualified personnel in the fields of electronics, sensor technology, software and IT, including in Germany.

Stabilisation of turnover development
Brose turnover has now stabilised after a dramatic drop in the spring. The company targets around 4.8 billion euros turnover in 2020. At 20 percent, the decline in sales compared to the previous year will be less than recently expected. As a result of large-scale cost-cutting measures, Brose expects to at least break even in 2020, despite the serious decline in turnover. “However, the Corona infection rate trends will determine how sustainable the current business recovery is,” stressed Schrickel.