German machine and car parts maker Schaeffler said on Tuesday it planned to lay off 4,700 people in Europe after its operating profit almost halved in the third quarter, while also closing down two sites, highlighting ongoing challenges impacting the European automotive industry.
Its shares fell 4.6% by 12:50 GMT and are down more than 20% so far this year.
The European auto sector is facing multiple hurdles ranging from high production costs and managing the shift to electric vehicles to falling demand and rising competition from China.
"We are upset by this news," Ulrich Schoepplein, head of the works council at Schaeffler, said in a statement and called on the executive board to start talks with employee representatives to find alternatives that would save jobs in the long term.
Schaeffler said Germany would see the biggest staff reduction, with plans to lay off around 2,800 people at 10 sites.
The rest of the job cuts will span across five plants in Europe, including two site closures, it added without naming the locations.
About 1,000 jobs will be reduced through displacements, bringing the net layoffs to 3,700 people, or 3.1% of Schaeffler's total headcount that increased after its merger with electric powertrain specialist Vitesco.
The German ball-bearings specialist expects to save around 290 million euros ($315.4 million) per year by the end of 2029 through the efficiency plan, which will cost around 580 million euros.
French tire maker Michelin announced job cuts and plant closures on Tuesday due to weak auto demand and cheap Asian competition. It plans to lay off 1,200 people and shut two plants in France by 2026.
Apart from the tepid automotive market, Schaeffler was hit by falling sales in its industrial business, which makes components for wind turbines and industrial robots, in the third quarter.
It saw weak demand and cheaper competition in China's wind energy market in particular.
As a result of weak demand for factory robots, Schaeffler said it would put its industrial robotics site Melior Motion up for sale.
It will relocate operations of another industrial automation site Ewellix to its plant in Schweinfurt, and close Ewellix's Taiwan factory.
Schaeffler had bought the Melior Motion and Ewellix sites only two years earlier.
