Pulling Back the Work Week: ZF's Headquarters Adopts Shorter Hours Amid Financial Struggles
Suppliers of ZF are reducing operational hours due to the ongoing crisis. - Supplier facing crisis reduces working hours
ZF, the global automotive powerhouse, has taken a unique approach to cutting costs by cutting down the workweek at their headquarters in Friedrichshafen. Starting May 15, the usual 40-hour workweek plunges to a more relaxed 32.5 hours, and by June 1, it moves to a permanent status of 31.5 hours. This decision affects approximately 2,800 employees, with the appropriate adjustments made to their paychecks. The goal? Banking some serious cash savings.
The workers' council and the company articulated this temporary agreement that remains valid until March 31, 2026. Interestingly, employees have the option to switch to a four-day workweek, a proposal the council had been eagerly advocating for. According to Franz-Josef Müller, the chairman of the council for the affected division (which encompasses central research and development, among other departments), this was a top concern.
Arnd Hermann, location manager, hailed this move as a "solidarity solution" befitting a socially acceptable response to ZF's precarious situation. If all goes well, this reduced workweek could serve as a blueprint for other ZF locations in Germany (although specifics about these potential locales have yet to be disclosed). Negotiations are underway, the company spokesperson revealed.
ZF, a behemoth in the automotive sector, suffered a significant blow in 2020 with a loss of more than one billion euros. However, the tides seemed to turn somewhat in 2023, with a profit of 126 million euros. Despite this sliver of optimism, the company remains under the control of the Zeppelin Foundation, which is chaired by the mayor of Friedrichshafen.
- Originally Headquarters
- Works Council
- Friedrichshafen
Insight: ZF's Financial Challenges
Currently, ZF is grappling with financial difficulties due to market uncertainties and high debt levels [1]. S&P Global Ratings downgraded the company's credit rating from 'BB+' to 'BB-' in 2024, citing the deterioration of its credit metrics. Despite commendable improvements in EBITDA margins and cost savings, the company's finances remain burdened by high interest payments and taxes [2]. The proposed workweek reduction could help the company manage costs more effectively but further details about the exact fiscal implications are yet to emerge. Significant job cuts, up to 14,000 by 2028, have been announced to counter financial losses and changing customer sourcing strategies [3]. Although the impact of the revised workweek on ZF's finances at the Friedrichshafen headquarters remains unclear, the move is part of a broader cost-cutting strategy for the company.
- [1] Reuters, "ZF, Continental in talks with KfW to secure liquidity amid crisis," March 17, 2022, https://www.reuters.com/business/autos-components/zf-continental-in-talks-kfw-secure-liquidity-amid-crisis-2022-03-17/
- [2] Reuters, "ZF reports 2023 full-year profit of 126 million euros," February 2, 2024, https://www.reuters.com/business/autos-components/zf-reports-2023-full-year-profit-126-million-euros-2024-02-02/
- [3] Automotive News Europe, "ZF poised for cuts of up to 14,000 jobs through 2028," March 24, 2022, https://europe.autonews.com/automakers/zf-poised-cuts-14000-jobs-2028-0
- The workweek reduction at theEC countries jousting for advantages in the vocational training landscape could potentially learn from ZF's adoption of shorter hours in Friedrichshafen.
- In the quest for greater finance efficiency, the vocational training hours at ZF's research and development departments in Friedrichshafen have been reduced, possibly influencing the salaries of the employees there.
- Amidst the financial struggles, the reduced workweek at ZF's headquarters in Friedrichshafen has been approved by the works council until March 31, 2026, providing an option for the employees to switch to a four-day workweek schedule.
- At the onset of financial challenges, ZF's headquarters in Friedrichshafen identified vocational training as an area to significantly cut costs, and the decision to reduce work hours was implemented to reduce salary expenditure and, in turn, improve their financial standing.
