Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The chief executive of Schaeffler, one of Germany’s top suppliers to the car industry, has warned that “unease and nervousness” sparked by Berlin’s recent withdrawal of funding for climate-related projects has spread beyond the country.
Klaus Rosenfeld, who took family-controlled Schaeffler public in 2015, said: “International customers are asking us: ‘What is wrong with [Germany]? Why is this happening?’”
Berlin this month agreed painful cuts to promised support for industry decarbonisation. This followed a landmark court ruling that blocked a move to transfer €60bn of funds originally earmarked for the Covid-19 pandemic to projects designed to modernise the German economy and fight climate change.
The shock decision came at the end of a tumultuous year for the export-reliant economy, which has grappled with sluggish industrial output and lower investment amid soaring costs, high interest rates and lagging global demand for its cars, chemicals and machines.
Referring to the slowdown in German industry, Rosenfeld, head of the Bavarian maker of bearings and car parts that employs just over 84,000 people, said it appeared “something is stuck” in Europe’s largest economy.
“Don’t forget, at least in Europe, we are the machine,” he warned. “If that machine is not running, or not running smoothly, others are impacted as well.”
As part of the cuts, the government last week abruptly ended a subsidy programme for electric vehicles a year early, despite sluggish sales. Volkswagen, the world’s second-largest carmaker, has already reduced shifts for workers making EVs this year, citing slowing demand.
Suppliers such as Schaeffler — along with rivals Bosch, Continental and Vitesco — are uniquely exposed to the German carmakers’ efforts to ramp up sales of electric vehicles. Together, they have warned of more than tens of thousands of job cuts in recent years, as they invest in new technologies for electric cars.
No family is more exposed to the car suppliers’ race to transition than that of Maria-Elisabeth Schaeffler and her son Georg, who chairs the Schaeffler company’s supervisory board. The family owns 46 per cent of tyremaker Continental, and has through its eponymous company agreed to pay €3.8bn in cash for Vitesco, a specialist in electric car parts.
Schaeffler’s offer for Vitesco, for which a large-enough proportion of investors have now tendered their shares, initially ruffled feathers, with minority shareholder Greenlight Capital last month warning peers “not to give it up . . . to competitors who have missed the boat”.
Rosenfeld said “the resistance” to the takeover was now “more or less gone”. He has previously argued that the merger between Schaeffler and Vitesco would lead to synergies worth €600mn a year by 2029.
Cost efficiency, Rosenfeld said, would become even more important in the coming years as Chinese electric vehicle markers such as BYD, Nio and Xpeng ramp up their push for market share in Europe.
“The competitive pressure at the moment is significant,” he said. “If you make the wrong decisions or go in the wrong direction, it can be costly.”
