Schaeffler plans to reorganise its UK business
Due to a number of factors - including 'uncertainty surrounding Brexit' - the global automotive and industrial supplier Schaeffler AG, which is based in Herzogenaurach, Germany and employs over 92,000 people worldwide, proposes to reorganise its UK business activities as part of its 'Agenda 4 plus One' programme and is considering closing its Llanelli and Plymouth (Barden Corporation Ltd.) plants in the UK, whilst retaining its Sheffield factory.
Courtesy Schaeffler
This programme includes a global footprint initiative that is examining the strategic and economic competitiveness and long-term sustainability of all Schaeffler locations worldwide. As part of this initiative the Executive Board has decided to reorganise its activities in the UK.
Following the proposed reorganisation, the company will retain a meaningful presence in the UK but will reduce its overall footprint and relocate some of its UK production to other existing sites outside the country. It is anticipated that the reorganisation plans will take up to two years to implement.
The global footprint analysis focused on how best to structure the business in the UK based on various factors including economic conditions, supply and demand, and the decisions OEMs are making. It also took into account that only 15% of the goods Schaeffler produces in the UK remain in the country, while the vast majority is exported to continental Europe. The uncertainty surrounding Brexit was one factor amongst others in the analysis of the UK market.
Juergen Ziegler, Regional CEO Europe, said: “A global business needs to regularly review market conditions and strive to optimise its footprint across different regions. The proposed measures we have taken for the UK reflect this business reality. However, we remain committed to keeping certain activities in the UK, a country that will continue to be important to us.”
Schaeffler currently has three plants in the UK, in Plymouth (Barden Corporation Ltd.), Llanelli and Sheffield, and two logistics centres, in Hereford and Sutton Coldfield. The UK locations have a total workforce of just over 1,000 people. Sheffield, the biggest of Schaeffler’s UK locations in terms of revenues and employee numbers, will be retained in its current form. The plant assembles clutches for passenger cars and tractors.
The two logistics centres, in Sutton Coldfield (Industrial products) and Hereford (Automotive Aftermarket), are located just 77 miles apart and the proposal is to combine operations at Hereford enabling various synergies and efficiencies. The majority of the office-based employees from the Sutton Coldfield location will be relocated to a leased office in the vicinity of Sutton Coldfield.
It is proposed to close the Llanelli and Plymouth sites in the medium term and relocate production to existing plants outside the UK, in the US, China, South Korea and Germany. At present, the Plymouth site mainly produces spindle bearings and machine parts for Schaeffler’s Industrial division and additionally specialised bearings for the aerospace and defence industries. At Llanelli, mechanical tappets and special-purpose bearings are made for Automotive OEMs and selected Industrial customers.
Schaeffler is now entering into statutory consultations with elected representatives for all employees at the locations affected.
Greig Littlefair, Managing Director of Schaeffler UK, said: “We are committed to having transparent and fair discussions with the employees affected by these proposals. We will also ensure our customers continue to be served and that these proposed changes create minimal disruption for them.”
Juergen Ziegler added: “The changes to our UK footprint are designed to make us more efficient by relocating parts of our production closer to where our products are used. What we are planning for the UK delivers on our ‘Agenda 4 plus One’ programme. Brexit is clearly not the single decisive factor behind our decision-making for the UK market, but the need to plan for various complex scenarios has brought forward the timing.”
Responding to the announcement of the planned Barding Bearings factory closure in Plymouth, Colin Turner, CEO of the West of England Aerospace Forum (WEAF), said: “This is has come as a major shock for Plymouth and is a wakeup call for the aerospace industry chain in the southwest. It is disappointing to hear of the loss of so many high value jobs but also WEAF is fearful of the knock on effect throughout the supply chain.
"Even though the South West aerospace industry is one of the most efficient in the world, the second largest in Europe, it shows that we are not immune to the wind of change and the uncertainty which swirls around the industry as it comes to terms with the challenges of Brexit .”