Autoliv, Inc. has recently announced its plans to accelerate global structural cost reductions
Autoliv, Inc., a global leader in automotive safety systems, has recently announced its plans to accelerate global structural cost reductions, with a particular focus on its European operations. These strategic actions are aimed at supporting Autoliv's medium- and long-term financial targets.
Autoliv is actively addressing its cost base to expedite its progress towards its medium-term targets. The company plans to optimize its geographic footprint and organizational structure as part of the accelerated structural cost reduction initiatives. This includes a significant reduction in its total direct and indirect workforce, amounting to approximately 11% of the workforce. Autoliv aims to simplify its logistics and geographic footprint by closing several sites in Europe.
As a result of these initiatives, Autoliv expects a reduction of up to 2,000 indirect positions globally, with around 1,000 of those in Europe, accounting for approximately 11% of its total indirect workforce. The impact will be felt across all divisions and functions within the company, and the first round of headcount reductions is expected to occur in 2023. Additionally, Autoliv intends to reduce its global direct headcount, which may lead to a reduction of around 6,000 positions globally, constituting approximately 11% of the total direct workforce, based on current sales levels as the baseline.
The measures to be taken by Autoliv will be defined in each country, ensuring compliance with local regulations and fostering dialogue with social partners to determine appropriate provisions for affected employees. The company expects a minor part of the total accrual to be recorded in the second quarter of 2023. The complete implementation of these initiatives is projected to be achieved by 2025, with an estimated payback time of 1-2 years.
Mikael Bratt, President and CEO of Autoliv, expressed that these initiatives are designed to optimize the company's geographic footprint for a more effective structure that can better serve its customers while reducing costs and driving long-term improvement in margins and cash flow. The headcount reduction will impact employees across offices, technical centers, and plants, including leadership positions at all levels.
Autoliv is actively engaged in negotiations with its customers to secure pricing that reflects the extraordinary inflation and addresses structural price gaps. While negotiations with most customers are progressing as planned, the timing for concluding updated customer agreements on a quarterly basis remains uncertain. The company acknowledges that negotiating with customers in Europe poses the highest priority and greatest challenge.
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