Redraft: Plan for Reorganizing the Drive Technology Division
ZF Announces Partnership for Restructuring and Job Security, Focuses on Powertrain Division
In a significant move, German automotive technology company ZF has formed a partnership with its management, works council, and IG Metall union to restructure its powertrain division, known as Electrified Drive Technologies Division or Division E. The aim is to make the division more profitable while safeguarding jobs as much as possible.
The partnership, titled "Partnership for Competitiveness and Job Security," was signed on July 30, 2025, during a ZF Supervisory Board meeting. This marks a commitment from both sides to collaborative and constructive cooperation for viable solutions in the interests of employees and the company.
The powertrain division includes electric, hybrid, and conventional transmissions. Financial difficulties within Division E have prompted tough restructuring measures, including potential severe cuts. Scenarios under consideration include a "carve-out" (separation of the segment from the rest of the group) or a "ramp-down" (deliberate winding down of the business) to prepare for worst-case options.
The restructuring is part of ZF's broader plan to address the financial challenges faced by the division. The company aims to cut up to 14,000 jobs in Germany by the end of 2028, reflecting about one in four German jobs at ZF. So far in 2024-2025, ZF has reduced 11,200 full-time positions worldwide, including 5,700 in Germany.
Despite these headcount reductions, ZF's first half of 2025 financial performance showed a slight organic sales decline but improved operating profit and free cash flow. The adjusted EBIT margin rose from 3.5% to 4.4%, and free cash flow improved from minus €494 million to positive €465 million.
At the beginning of June, ZF introduced the new SELECT drivetrain platform for electric mobility products. The platform uses multiple modular components for quick and cost-effective development and manufacturing of customized drivetrain solutions.
The focus of these job cuts is on the drive segment of Division E. The division is currently facing economic difficulties, leading to job cuts announced last summer. These factors significantly restrict the room for maneuver within the company.
Employees at several locations of Division E have protested, expressing their dissatisfaction before the Supervisory Board meeting this week. Management has agreed to low prices for conventional transmissions and hybrid components to secure orders. However, layoffs cannot be ruled out given the dynamic market.
Further information about the restructuring will be published after the completion of the talks. The partnership aims to secure the strategic and economic future of ZF, with Division E being the focus of these efforts.
[Sources: 1, 2, 3, 4]
Note:
- The news source for the SELECT platform presentation is wiwo.de.
- The company forming the partnership is based in Friedrichshafen.
- ZF's website (zf.com) provides background information and first impressions of the SELECT platform.
The partnership, titled "Partnership for Competitiveness and Job Security," aims to secure the strategic and economic future of ZF, primarily focusing on the restructuring of its Electrified Drive Technologies Division (Division E), which encompasses technology for electric, hybrid, and conventional transmissions.
To address the financial challenges within Division E, the company is considering various scenarios, such as a "carve-out" or a "ramp-down," indicating a potential separation of the segment or a deliberate winding down of the business in preparation for severe options.
