Losses, job cuts ahead for Bosch

MUNICH, Germany — The crash in the global automotive market has left its traces in the FY 2008 figures of tier one Robert Bosch GmbH. The company said 2009 will be to be "one of the most difficult years" in its 123-year history and announced job cuts.

Bosch had announced preliminary figures for FY 2008 already in January. The poor results presented now are in line with these figures, but it can be assumed that the first quarter was rather disastrous. At official the company's balance sheet presentation Thursday (April 23), Bosch CEO Franz Fehrenbach said the company will make a loss in 2009. "We expect the deep recession to continue well into 2009, and our first quarter has clearly approved this apprehension", Fehrenbach said. For the second half, the company expects not a return back to growth but only "first indications the situation will stabilize on a low level."

Fehrenbach also announced job cuts. "We have to remove foreseeable overcapacities," he said without elaborating. At the company currently 67.000 workers in Germany and abroad are on short-time working schedules, working times for another 26.000 workers have been reduced on a different legal basis.

The company has been hit by the automotive market slump in the first time; Bosch also runs large businesses in other industrial segments such as industry automation, building technology, consumer goods and electric tools. While Industrial technology widened its sales by 13 percent — in part as a consequence of the company's acquisition of PV technology provider Ersol AG — the automotive segment is much bigger. It was not only the weak demand for cars in general that dragged down the company's figures but also the fact that the market share for diesel vehicles declined. Bosch's fuel-saving strategy is based heavily in improvements in diesel technology. Despite having invested €3.2 billion (about $4.16 billion) into automotive-related R&D, sales for this segment declined 6.9 percent to &128;26.5 billion. The US market was the weakest one with a decline of 16 percent, but Europe and Asia also contributed to the sales drop.

Nevertheless, major future projects will be continued. The company slightly delayed the launch of its new semiconductor fab currently under construction in Reutlingen. While this fab originally was scheduled to ramp up production in 2009, the works have been delayed somewhat. The new schedule calls for ramp-up in spring time 2010. In addition, Bosch is in the process of building a PV plant jointly with its subsidiary Ersol. Until 2012, the company plans to invest €530 million in a production line for crystalline solar cells, creating 1100 jobs.