Bad Neustadt a. d. Saale. The automotive industry and its suppliers are currently facing difficult market conditions. The Preh Group cannot escape this and will therefore take proactive countermeasures to safeguard its competitiveness. A total of around 420 jobs will be cut in Bad Neustadt. Nevertheless, Bad Neustadt will retain its role as the Preh Group's headquarters. The job cuts will affect all areas and functions of the company and are to be implemented by the end of 2024. The aim is to implement the measures in as socially responsible a manner as possible in close consultation with the works council.
Preh CEO Zhengxin “Charlie” Cai explains: “Preh is not immune to the weak overall economic situation and the negative industry trend. The first signs of a decline in sales were already apparent in 2023. Unfortunately, the downward trend also accelerated significantly in the first quarter of 2024, particularly in components for electric vehicles. At the same time, our competitiveness is suffering from the high costs of energy and labor in Germany compared to other countries. Following short-time working in some areas at the beginning of the year, we must now take decisive action. The combination of a weak economy and high costs for labor, energy and materials requires proactive countermeasures to ensure our competitiveness in a global context."
The Bad Neustadt site has been making losses for five years. Therefore, the reduction of around 420 employees in Bad Neustadt is necessary in order to bring this location back into a financially healthy situation. The works council has been informed by the management about the preliminary considerations regarding the restructuring measures and will be closely involved in the further process “I am aware that our measures will mean a tough cut for the headquarters. We will therefore make the restructuring measures as socially responsible as possible. The management will also make a financial contribution to the program,” says Cai.
Cai recalls that, following the high level of investment in the comparatively young business field of e-mobility in recent years, the unexpected expiry of subsidies for electric cars has also thwarted previous plans. In the first quarter of 2024, new registrations of electric cars in Germany fell by 14% compared to the same period last year, and in March there was even a slump of 29%.
Charlie Cai: “We have continuously worked against the unfavorable combination of a weak industry economy and high energy and material costs. The difficult situation is now also presenting our customers with ever greater challenges. That is why we will now do everything on our side to ensure our competitiveness. Under normal conditions, we would have come very close to our sales target of EUR 2 billion this year, as we had set the course for dynamic growth in both e-mobility and the HMI segment. Now we have been seeing declining sales for some time, which would further worsen our already strained earnings situation in Bad Neustadt without decisive countermeasures. After years of losses, we must now achieve a turnaround at our headquarters."
Cai also emphasized that he is confident of overcoming this industry crisis. Preh will maintain its commitment to e-mobility, as it will remain a high-tech company with good prospects for the future in principle. "But we must recognize that Preh cannot escape the difficult situation in the industry. With the decisions we have now taken, we are creating the conditions for Preh to remain a leading partner to car manufacturers worldwide with its strong technological expertise."
About Preh
As a global automotive supplier, the Preh Group currently employs around 7,400 people (including 1,700 in Bad Neustadt) and generated sales of around 1.7 billion euros in 2023. Preh was founded in Bad Neustadt a. d. Saale in 1919 and has been part of the Joyson Group since 2011. Preh's development and manufacturing expertise focuses on HMI systems for passenger cars and commercial vehicles as well as e-mobility components in the low- and high-voltage range. Within the Joyson Group, Ningbo (China), founded by Jeff Wang in 2004, Preh forms the Automotive Electronics division as a subsidiary of the listed Joyson Electronics Corp (600699:Shanghai).