Crisis-Hit Auto Supplier ZF Shifts to Shorter Work Weeks at Headquarters
- Supplier encountering crisis reduces working hours
In a bid to tide over its current crisis, automotive supplier ZF will temporarily implement a shorter work week at its Friedrichshafen headquarters starting May 15. This move will see weekly working hours reduced to 32.5 hours initially and then permanently lowered to 31.5 hours from June 1. This decision, announced by both the company and the works council, affects approximately 2,800 employees, with their wages accordingly adjusted. ZF aims to save a considerable sum running into millions with this measure.
This plan, valid until at least March 31, 2026, also includes an option for a four-day work week, a concern raised by the works council. Franz-Josef Müller, chair of the works council for the affected 'Plant Z' which houses central research and development and various divisions, pointed out this aspect. Site manager Arnd Hermann termed the measure as a show of solidarity, serving as an acceptable response to the company's precarious situation. This could potentially serve as a model for other ZF sites across Germany, though no concrete decisions have been made yet. Negotiations are already underway for such expansions.
ZF, one of the world's leading automotive suppliers, endured deep losses last year, posting a loss of over one billion euros. In 2023, the company saw a profit of 126 million euros. The company is 93.8% owned by the Zeppelin Foundation, led by the mayor of Friedrichshafen.
A Shift in Gears: ZF's Journey Through Market Turmoil
Struggling against industry shifts, supply chain disruptions, and financial pressures, ZF has found itself facing significant challenges over the years. The company is well-known for its transmissions, chassis components, and active and passive safety technology.
The idea of reduced work hours, first implemented in April 2025, represented a response to the operational and economic difficulties at ZF's German sites, including its Friedrichshafen headquarters. Through negotiations with their works councils, this change impacted a significant portion of the domestic workforce.
Economic Adjustments: consequences for Employees and Business Operations
- Employment Security: By opting for reduced hours, ZF aimed to preserve employment for future growth periods, avert costly and disruptive layoffs.
- Wage Adjustments: Shorter work weeks correspond to lower net income for affected employees, potentially affecting family budgets and local economies.
- Operational Maneuverability: The firm gains the ability to scale labor costs in response to fluctuating demand, a crucial factor in the cyclical automotive sector.
- Industry Resonances: These kinds of measures often indicate broader issues within the industry, reflecting the pressures experienced by traditional automotive suppliers grappling with rapid technological advancements.
Financial Repercussions and Industry Perception
S&P Global Ratings downgraded ZF Friedrichshafen AG's credit rating from BB+/Negative to BB-/Stable in April 2025, illustrating ongoing concerns about the company's financial health and market position. This downgrade underscores the severity of the challenges ZF encounters, including operational restructuring and adapting to new market realities.
| Aspect | Details ||-----------------------|-------------------------------------------------------------|| Timing | April 2025 || Location | Friedrichshafen and other German sites || Number Affected | Thousands of employees || Method | Negotiated via works councils || Rationale | Avoid layoffs, adjust to reduced demand || Employee Impact | Lower income, potential job insecurity || Rating Change | Credit downgrade (BB+/Negative → BB-/Stable) by S&P Global |
Looking Ahead: A Turbulent Road for Traditional Suppliers
The shortened work week at ZF's Friedrichshafen headquarters serves as an example of the company tackling industry-wide metamorphosis and economic strife. While this move helps maintain jobs in the short term, it highlights the broader challenges faced by traditional automotive suppliers navigating a rapidly evolving market.
- The shortened work week initiative at ZF's Friedrichshafen headquarters, inspired by the need to address the challenges of the evolving automotive industry, extends to vocational training programs in EC countries. This collaboration aims to equip workers with the necessary skills to adapt to the industry's technological advancements, thus ensuring a sustainable workforce in the long run.
- To secure funding for these vocational training programs and potential debt restructuring, ZF intends to seek support from financial institutions and transportation agencies. Partnering with these entities will also open up opportunities for collaboration in the development and implementation of innovative vehicle technologies, further positioning ZF as a leading automotive supplier in the global market.
