After the traditional Miele brand, whose entrepreneurs announced at the beginning of the year a partial move to Poland for cost reasons, now it is the dishwashers and appliances of another well-known German brand that no longer meet their expectations: Bosch. Siemens Hausgeräte (BSH), despite being a purely Bosch subsidiary for almost ten years, the company continued to shrink steadily in the first quarter of the year.

A four percent drop in sales is expected. The company, which in addition to the traditional Bosch brand also includes Neff, Siemens and Gaggenau, wants to counteract this by reducing its workforce. More than 3,000 jobs will be eliminated worldwide and 450 in Germany. Consumer demand, which has become cautious due to inflation and the housing crisis, is weak.

A shocking experience for the approximately 60,000 employees worldwide, although BSH boss Matthias Metz assures: “We have a clear plan for the future.” Like Miele recently, signs point to a storm this April. However, it is a comparatively smaller storm in the entire group.

“The outlook is cautious in all sectors that are important to us”

Because the catastrophe looming over the soon-to-be 140-year-old company primarily threatens the largest division of Robert Bosch GmbH. Under the new name “Mobility”, Bosch combines automotive technology with IT. The division generated a good 61 percent of total sales in 2023. Unlike household appliances and tools for the end consumer (DIY sector), the automotive supplier has to deal with a large number of changes at the same time. Last year was more difficult than expected, said Bosch boss Stefan Hartung when the balance sheet figures were presented in February. The key to future success is climate protection technologies; However, currently demand seems to be declining worldwide, which is not good news for a complex technology that requires large investments.

According to Hartung, the volatility of the framework conditions, such as the surprising elimination of bonuses for the purchase of electric cars in Germany, is partly responsible. Bosch sees an evolution in consumers' long-term purchasing decisions that is difficult to predict. Poison for a company that pursues an expensive and specific innovation. “The outlook is cautious in all sectors that are important to us,” warned Bosch looking to 2024, in which a change in trend is not expected. The internationally active residents of Stuttgart expect the world economy to grow by at most two percent this year; Bosch only hopes it will improve in 2025.

At Bosch there is a “need for adjustment” everywhere

However, many problems seem to be more persistent than Bosch would like. The word “need for adjustment” will obviously become a constant in the near future. Taking into account the recent stability of the number of employees, Bosch does not understand these to be operational layoffs, which are contractually excluded until 2027. However, many of the almost 134,000 employees in Germany have to prepare for turbulent times. In Germany alone there are expected to be 3,700 jobs available.

Bosch wants to use qualification measures to transfer employees from weaker areas to stronger areas. In the automotive supply business, as we can see from the Bosch advertisements, this is apparently not enough: when it comes to the “need for adjustments”, i.e. job cuts, we are already talking to the representatives here from the workers. Background: Profound changes in the approach of automakers create completely different, sometimes new, requirements for suppliers. At Bosch, the area of ​​“autonomous driving” with its control technology and software products will be especially affected. At the same time, Bosch is investing in non-European countries and, although management does not like to hear such connections, the trend across the industry is towards offshoring from Europe.

China's dominance is causing problems for manufacturers and therefore also for suppliers.

For a long time, Bosch had extensive experience as an electronics supplier in this country. Starting with the famous ABS braking system, the Stuttgart company has repeatedly introduced innovations that have become industry-wide standards. Today, Bosch is working on internal developments of computer chips that will also become standards. Special SiC chips (silicon carbide chips) based on our own production technology are planned to hit the market from 2026.

Recently, Bosch took over a chip factory in the US, where overall conditions are favorable thanks to US legislation such as the Inflation Reduction Act (IRA) investment support program. These expensive innovations point to a world in which electromobility will be part of everyday life. It could once again be questionable whether this plan will work.

It is therefore not surprising that Bosch is concerned about current events. Above all, the rapid increase in Chinese exports in the electric vehicle sector is causing problems for the Stuttgart company, even though Bosch itself has representation in China. However, in 2023 alone Chinese automakers recorded a 60 percent increase, thus upsetting some of the pricing calculations of their European competitors. The main loser due to its size: VW. Not surprisingly, given the largely standardized electric technology of Chinese brands, especially BYD, the Asians have strong cost advantages.

German manufacturers pass the resulting price pressure on to their suppliers, who in turn look for ways to reduce their costs. Whether through job cuts, whether through pressure on suppliers themselves or through acquisitions of companies in non-European countries where existing companies already produce cheaper.

Suppliers and auto giants increasingly fight conflicts publicly

In general, the air between suppliers and the consumer industry is increasingly thin. And the tone is harsher. Overall, car companies continue to achieve adequate margins, especially by focusing on selling higher quality cars, but suppliers face cost pressures and strict delivery requirements. In some cases, production barely covers costs, according to industry association CLEPA.

What was once regulated in discreet conversations between us is now increasingly discussed in public, for example when, as recently happened at BMW, large-scale recalls are carried out due to problems with Continental's electronic braking systems. Costs of up to 400 million euros can then be discussed. Bosch itself is currently at odds with Mercedes over delivery issues, Handelsblatt newspaper reported in early April. The laughing third parties are quickly identified: the Chinese manufacturers whose structures are regulated by the state and enforced by Beijing without the possibility of objection.

Job cuts? A “cultural break” in the traditional Bosch company

At Bosch, founded by Robert Bosch in 1886, constant growth has been a point of honor for decades. After all, more than 90 percent of Bosch belongs to the Robert Bosch Foundation, which is oriented toward the common good. Bosch employees, accustomed to various benefits, often only knew the current vocabulary by hearsay: layoffs, reduced working hours, increased performance.

IG Metall now sees all this on the horizon. Trade unionists and works councils do not seem to recognize their company; A worker representative describes a “breakdown in culture” in the face of job cuts plans, even if this is cushioned in a “socially acceptable” way. And unreasonable demands also reach the best specialists in the areas of research and development, whose working hours and, therefore, also their income, could be reduced.

Industry experts at CLEPA see things even bleaker. The jobs that have already disappeared since 2018, around 60,000, would be followed by many more. Because it is not certain that the new products, that is, those in the field of electromobility, with their personnel demands can compensate for the loss of jobs that depend on the combustion engine. According to Oliver Simon, member of the general works council at Bosch, the market simply does not support it. The company's founder, Robert Bosch, once stated that he would rather give up money than customer trust. In an emergency, both could come into play.

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