German car tire giant Continental to cut 5,500 jobs

Continental AG has been expanding production to the US, including a factory in Clinton, Mississippi. (Credit: AP)

German car parts manufacturer Continental AG will cut 5,040 jobs across the world by the end of 2028 in an effort to save $554 million.

The company said it will reduce its manufacturing activities ahead of the introduction of stricter EU emissions rules due to be implemented in January 2020.

In a statement, Continental said the restructuring program "aims to strengthen the company's competitiveness in the long term and to ensure its viability in the future.”

The majority of jobs will be lost in Germany. The company says 2,200 positions will be affected at its Babenhausen site where production and research activities will be phased out or transferred to other factories. Some 850 jobs will be lost at Limbach-Oberfrohna where the company's hydraulic components business, used in diesel engines, will be discontinued. While 520 jobs will be cut with the 2024 closure of its Roding site, where Continental makes hydraulic components for gasoline and diesel engines.

Outside Germany, 720 positions will be cut in the US when construction of hydraulic components for gasoline engines ceases at its factory in Newport News, Virginia, also in 2024. In Pisa, Italy, 750 jobs are also under threat where the company says production of petrol engine components will end by 2028.

The company's CEO, Elmar Degenhart, said: "We have been holding intensive, constructive talks with employee representatives for some time. The crucial question now is, how can we implement the necessary measures responsibly and with foresight so that we can emerge stronger from the current reorganization? We will be supporting those employees affected as much as possible."

Degenhart, right has been Continental AG's CEO since 2009. He is pictured here with German Chancellor Angela Merkel (Credit: Reuters)

Continental employs more than 240,000 staff but has suffered from a downturn in demand for gasoline and diesel vehicles.

New EU regulations mean that from 1 January 2020, emissions targets for new passenger cars will be reduced from 130 grams of CO2 per kilometer to 95 grams per kilometer.

Continental is not the only European automotive company to cut jobs as they restructure to meet new demand for electric vehicles. Already this year, Ford, BMW and Volkswagen have announced future job losses totaling 25,000.

European car sales grew in October, but the number of new registrations has fallen by 0.7 percent since the start of 2019. Car makers say they are seeing the effects of weakening demand in some regions and the continuing threat of trade tariffs in the US.