CTTAY Continental AG (PK)

--Continental's supervisory board approves plant closures and about 5,000 job cuts

--Restructuring affects sites in U.S., Germany and Italy, while Spanish site is also under consideration

--Measures come amid a global slump in demand, industry's transition to electric cars

By Max Bernhard

Continental AG (CON.XE), one of the world's biggest car-parts suppliers, said Wednesday that its supervisory board approved sweeping restructuring measures, including plant closures and some 5,000 job cuts in the U.S. and Europe.

Continental said it will shutter its sites in Newport News, in Virginia, and Roding, in Germany, in 2024, with around 520 and 720 jobs to be cut, respectively. Other sites in Germany and Italy will also be affected and the company's management will begin discussions over another site in Spain soon, Continental said.

The measures are part of a decadelong restructuring plan intended to tackle a slump in global auto-production, outlined by Continental earlier this year. By the end of 2023, about 15,000 jobs could be affected by cuts, possible sales of business areas as well as transfers and digitization among other things, it said at the time.

A slowdown in demand for cars in some of the world's biggest markets such as China, the U.S. and Europe is coinciding with the industry's shift towards electric vehicles. Suppliers have found themselves in a dilemma, with electric-car sales still too low to compensate for lost business from conventional combustion engines. At the same time, the shift towards electric mobility has made plant closures necessary given the drastic decline in demand for hydraulic components, Continental said.

In Limbach-Oberfrohna, Germany, Continental plans to discontinue its hydraulic-components business for diesel engines in 2028, affecting some 850 jobs. Production of gasoline engine injectors in Pisa will be phased out between 2023 and 2028, with around 750 jobs impacted.

In Babenhausen, production of display and control systems will be phased out by 2025 and research and development activities will be moved elsewhere by the end of 2021, the company said. Over 2,200 jobs will be affected at the site.

On top of that, Continental said its management will soon start talks on its site in Rubi, Spain, where it employs 760 people.

Chief Executive Elmar Degenhart said the company is now focusing on profitable growth areas such as automated and connected driving as well as the tire, industrial and end-customer businesses.

Write to Max Bernhard at max.bernhard@dowjones.com; @mxbernhard

(END) Dow Jones Newswires

November 20, 2019 11:10 ET (16:10 GMT)

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