Conti Cuts 6,000 Jobs in 2009 Q1
German news sources have reported that Continental cut 6,000 jobs from its worldwide operations during this year’s first quarter. Karl-Thomas Neumann, the manufacturer’s chief executive, told shareholders at the annual meeting in Hanover that an additional 25,000 workers will be working shorter hours by the end of April. Both actions are at least partially related to the “major challenge” facing the company as a result of the mingling of loan agreements, deflated auto markets and ongoing global financial turmoil, if it is to meet debt and earnings conditions agreed when the company bought Siemens’ VDO automotive-electronics division in 2007. Conti is facing up to a 3.5 billion-euro payment in August 2010 as a result of that purchase, which has necessitated the forthcoming change of strategy, to be announced within 100 days according to Neumann.
Financial news source Bloomberg suggests that Conti’s options include refinancing, which would depend on the availability of credit, divestments, which will depend on the strategic guidance given by Schaeffler in addition to the market being in a somewhat healthier state, and selling shares – an option that looks decidedly unappetising, bearing in mind the current price of stock (18.45 euros at 15:23 today – Bloomberg points out that the stock has fallen 38 per cent in 2009). While none of these options looks wholly appealing, Neumann states that the prospect of standing is “becoming increasingly risky… We need answers and we need them as soon as possible.”
Following the protests outside the company’s car tyre factory in France, 2,000 employees were again present at the shareholders meeting to show their displeasure. Neumann defended the closure, alongside the shutdown of its truck tyre plant nearby, explaining that car manufacturers are building 14 million fewer vehicles in 2009 from the 67 million built in 2008, and that levels of production may not be redressed before 2013.