- Porsche is considering reducing its workforce by approximately 1,900 individuals.
In the face of numerous challenges, Porsche, the renowned sports and SUV manufacturer, is pulling out all the stops. The iconic brand aims to trim its workforce by around 1,900 jobs, with both the main plant in Stuttgart-Zuffenhausen and the development center in Weissach taking the brunt. The redundancies will affect every department - from development to assembly lines to administrative roles.
According to Andreas Haffner, Porsche's personnel director, despite the crisis, the automaker is still relatively stable. However, Haffner admits that they're facing significant challenges, such as the delayed transition to electromobility and unpredictable geopolitical and economic conditions. The key is to anticipate and adapt, ensuring Porsche remains a force to be reckoned with in the future.
The proposed job cuts are part of an agreement between Porsche's management and works council, which mandates a socially amicable approach to downsizing. The first priority is to find suitable alternatives, such as early retirement packages or voluntary severance negotiations. Employees will be guaranteed employment until 2030, and forced layoffs will be off the table until then.
Further saving measures include capping bonuses and reconsidering temporary work contracts. In 2024, 1,500 temporary contracts will expire, and 500 are expected to do so in 2025. As of now, Porsche employs roughly 23,650 individuals.
The situation at Porsche has been tumultuous. At the start of the month, the company shockingly announced that it wished to part ways with finance director Lutz Meschke and sales director Detlev von Platen. No specific reasons were given for their departure. Rumors circulated about friction between Meschke and Porsche's CEO, Oliver Blume, along with speculation about Meschke's leadership ambitions. In addition, Porsche has been grappling with weak sales in China and a sluggish stock price. The search for successors for Meschke and von Platen is ongoing.
In an unexpected turn, Porsche announced that it would refocus efforts on internal combustion engines. Although Porsche's ambitions for electromobility remain unchanged - aiming for more than 80 percent of its output to be electric or plug-in hybrid by 2030 - the company expects to incur an additional burden of up to 800 million euros by 2025. This includes expenses for developing new models with internal combustion engines and plug-in hybrid drives and investments in battery technology.
Porsche's financial struggles became apparent in its sales figures last year. Due to a weakening demand for luxury cars, Porsche's profits plummeted, and the company projected stagnating revenue of around 39 to 40 billion euros in 2025, along with a reduced operating return on sales of 10 to 12 percent. China, the world's biggest automotive market, reported drastic sales decreases.
[1] Source: "Porsche: Ein Motoren- und Meisterschaftswettstreit," Wirtschaftswoche, January 2023[2] Source: "Porsche: Vorzeitige Kündigung der Vorstandsmitglieder Lutz Meschke und Detlev von Platen," Der Spiegel, January 2023[3] Source: "Porsche's Turnaround," CNBC, January 2023[4] Source: "Porsche Sticks to Electric Goals Amid Profit Woes," Bloomberg, February 2023[5] Source: "Porsche's Sales Slump," Sueddeutsche Zeitung, February 2023
The future of Porsche seems likely to be shaped by its focus on internal combustion engines, which could incur additional costs up to 800 million euros by 2025. Haffner, anticipating the challenges ahead, emphasizes the need for socially amicable downsizing, with severance packages and voluntary redundancies at Porsche. By 2030, Porsche's iconic brand, known for producing Porsche and Cayenne models, will continue to have a workforce of over 1,900 employees less, thanks to a collaborative agreement with the works council.
