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Autoliv to Cut 8,000 Jobs Globally, Boosting Cost-Cutting to Counter Rising Inflation
The Auto Supplier to Cut Jobs Mostly in Europe to Tackle Rising Raw Material Costs
STOCKHOLM — Global auto supplier Autoliv said it is speeding up cost cuts, mainly in Europe, expecting to cut 6,000 direct jobs or 11 percent of its workforce along with another 2,000 indirect jobs.
The world’s biggest maker of airbags and seatbelts said in a statement on Thursday that the measures across its operations included the closure of several sites in Europe, and it expected the new initiatives to be fully implemented by 2025. The 2,000 indirect job cuts include people not working directly on production lines.
“These initiatives will continue to optimize our geographic footprint for a more effective structure,” CEO Mikael Bratt said. “We intend to simplify and consolidate how we operate in all areas.”
Auto suppliers have been hit by soaring raw material prices. Autoliv in January said cost inflation in 2022 was the worst in three decades, and that it was seeking to pass those costs on.
“The company continues to negotiate with its customers to secure pricing that reflects the extraordinary inflation and corrects structural price gaps,” Bratt said on Thursday.
“The highest priority and greatest challenge are the customer negotiations in Europe.”
Autoliv said in January cost inflation in 2022 was the worst in three decades, and that it sought to pass those costs on.
Bratt told Reuters it was price negotiations with customers based in Europe that were the most challenging, a region that has high inflation and a tough macroeconomic environment.
“What takes time is that these negotiations are very detailed, it is basically component by component, plant by plant, as we go through this,” he said.
Sweden’s Autoliv, whose rivals include ZF and Joyson Safety Systems, reiterated a full-year outlook given in April for a widening of its adjusted operating margin to around 8.5 to 9.0 percent.
Autoliv ranks No. 30 on the Automotive News Europe list of the top 100 global suppliers with worldwide sales to automakers of $8.2 billion in 2021.
Challenges Faced by Autoliv in Curbing Costs
Autoliv has announced that it will be cutting 8,000 jobs to counter rising inflation, mainly in Europe. This comes as the company’s earnings have been hit hard by soaring raw material prices. As a result, the world’s biggest maker of airbags and seatbelts has been forced to move quickly to reduce its operational costs in order to remain competitive.
The company expects to cut 6,000 direct jobs and 2,000 indirect jobs. The former will involve the closure of several sites in Europe. The measures are expected to be fully implemented by 2025. CEO Mikael Bratt has stated that these initiatives are aimed at optimizing the company’s geographic footprint, and simplifying its operations in all areas. The 2,000 indirect job cuts include people not working directly on production lines.
However, reducing costs is not without challenges. Autoliv has been negotiating with its customers to secure pricing that reflects the extraordinary inflation and corrects structural price gaps. Bratt has acknowledged that the highest priority and greatest challenge are the customer negotiations in Europe. This is because this region has high inflation and a tough macroeconomic environment. Additionally, negotiations are very detailed, being essentially component by component, plant by plant. Such negotiations take time.
Autoliv’s Outlook for the Year
Despite the challenges, Autoliv has reiterated a full-year outlook given in April. The company hopes to widen its adjusted operating margin to around 8.5 to 9.0 percent. Autoliv ranks No. 30 on the Automotive News Europe list of the top 100 global suppliers with worldwide sales to automakers of $8.2 billion in 2021.
In conclusion, Autoliv’s cost-cutting measures, unfortunately, come at the expense of 8,000 jobs. The cost-cutting initiative is driven by soaring raw material prices that have severely impacted the company’s earnings. However, the company hopes to optimize its geographic footprint, simplify its operations, and secure pricing that reflects the extraordinary inflation and corrects structural price gaps. Autoliv is confident that its full-year outlook will be met.
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