Wacker Chemie plans to cut more than 1,500 jobs. The goal is to cut costs and strengthen its edge against Chinese competition.
The Munich-based chemical manufacturer aims to save about 150 million euros annually by reducing its workforce by about 9% by 2027, with most of the job losses occurring in the domestic market. This will account for half of the targeted 300 million euros in annual savings, mainly from lower fixed production costs, Wacker said, as quoted by The Wall Street Journal.
The company has approximately 16,400 employees. “The goal is to reduce our costs to a competitive level through savings,” said Chief Executive Christian Hartel.
The cuts add Wacker to a long list of German employers that are cutting labor costs in response to economic hardship. The pressures on German industry range from anemic domestic investment to high energy costs and the growing challenge of exporters from China and other economies. Higher barriers to the key US market due to President Trump’s trade tariffs have also hit the country’s key export sector.
“Germany has lost international competitiveness as a result of long-term underinvestment, part naivety and arrogance and China’s rise from an export destination to a systemic competitor,“ wrote ING economist Carsten Brzeski in his analysis.
Auto giant Volkswagen, a longtime mainstay of Europe’s largest economy, has cut thousands of jobs since the end of last year and plans to close some plants for the first time in its history.
Rival Ford is also cutting thousands of positions in Germany and other parts of Europe due to a weaker market for electric vehicles.
Falling demand for electric vehicles has also led Porsche to abandon plans to produce its own battery cells, forcing layoffs in its battery manufacturing subsidiary in southwestern Germany. Supplier Bosch plans to cut its workforce by 13,000 people over the next five years.
In other sectors, chemicals distributor Brenntag, Wacker rivals Ineos and Solvay, sportswear maker Puma and airline Lufthansa have all recently announced job cuts in Germany.
The cuts underscore the stagnation in the German economy and have contributed to the number of job seekers in the country, which topped 3 million this summer. That level has since declined, although there are “few signs of a full recovery,“ economists at consultancy Pantheon Macroeconomics wrote to clients.
Wacker has cited high energy prices and bureaucratic red tape in Germany as obstacles to growth fueling its job-cutting drive. Last month, the company said it expected to make a net loss this year, citing a "persistently weak" chemicals market.
“The market environment is changing and competitive pressure is high, especially from China,“, Hartel said.