The move follows the company’s acquisition of Siemens VDO Automotive late last year.
«We are talking about savings of a lower double-digit million potential,” Continental CEO Manfred Wennemer said at a press briefing in February.
In the future, work now done by 5,000 engineers employed elsewhere will be done in-house by Continental engineers. The company declined to say which suppliers would be affected.
Continental officials say the move is part of the company’s plan to improve profitability. Continental’s overall profit margin is already at 10 percent, but former Siemens VDO divisions have an operating profit margin of 7.8 percent.
Following the 11.4 b€ purchase of Siemens VDO, Continental is bundling its activities in R&D, purchasing and information technology. At least 2,500 jobs are set to disappear as the merged company moves toward leaner sales and administration structures.
As part of the integration plan, Continental also wants to foster stronger relationships with a smaller number of technology suppliers.
«The pressure on some suppliers will increase,” he warned.
Following the takeover last December, Wennemer discovered that, in some cases, VDO was paying less to suppliers than Continental for similar products. Talks with suppliers about purchasing contracts for the combined company started immediately and Wennemer said in March he was pleased with the early results.
He said cost savings in the combined company would surpass 300 m€ a year, up from a December target of 170 m€.
The Continental CEO also said the integration of the two companies is on schedule. Said Wennemer: «We are planning to finalize the integration in early 2009 and start concentrating on new projects then.”