ZF back on growth track after crisis

“Although the markets are currently only slowly recovering, and residual risks remain, we will reverse the trend this year”, said ZF CEO Hans-Georg Härter at the company’s annual press conference in Stuttgart. He anticipates a sales increase of approximately 10 percent for his company in the current year.



Fiscal year 2009, in contrast, was one of the most difficult years in the history of the company. Due to the worldwide financial and economic crisis, there were massive production decreases in the plants. The number of employees was reduced by about 3,500 to a total workforce of approximately 59,800 at the end of 2009. “In Germany, we were able to completely avoid layoffs”, emphasized Härter. Instead of layoffs, the company took advantage of flexible options such as semi-retirement or early retirement packages, while generally leaving vacant positions unfilled. ZF also relied on state-subsidized reduced work hours on a large scale. Since this flexible measure, which allows companies to avoid layoffs, is not available to all our foreign sites, a series of restructuring and production relocation steps had to be taken. Sites were partially closed and employees were offered socially acceptable solutions. As a result, the number of non-German ZF production companies (located in 27 different countries) fell from 125 to 123.



ZF Group’s sales and earnings position also reflected the global economic downturn. Operating earnings were 361 million euros in the red. The company’s sales fell by about a quarter. Especially hard hit by this negative development were the ZF divisions and business units that serve the truck and construction machine sectors, which had to deal with sales drops of in some cases over 50 percent. The decreases in the automobile and agricultural machine sectors were between 10 and 30 percent. Other market segments, such as city buses, reported smaller decreases. Regional business development was also varied in 2009. The relatively small drop of 7 percent in the Asia-Pacific region or 8 percent in Africa stood in stark contrast to sales declines of 30 percent in Western Europe, 27 percent in Eastern Europe, 24 percent in North America and 21 percent in South America.



Liquidity and independence assured



Liquidity is a high priority for Germany‘s third largest auto supplier. “With a solid equity ratio of 38 percent and a net financial position of nearly a billion euros, we feel well-positioned for the future”, said ZF CEO Härter. This high level of liquidity is assured by a solid loan-based financial approach on the one hand, and by a comprehensive austerity program on the other. Companywide savings amount to 600 billion euros annually. Cost-cutting measures were taken in materials management, administration and sales, investments, and personnel, among other areas.



Market share increased



Research and Development (R&D) is at the top of ZF’s agenda. Härter summed this up succinctly: “Those who save here are saving in the wrong place”. At ZF, approximately 5,300 employees work in this area worldwide. Due to the sales decrease caused by current economic conditions, the R&D rate in 2009 of over 7 percent was unusually high. In the medium-term, ZF is striving to return to a sustainable rate of at least 5 percent. Thanks to such substantial outlays, however, ZF was able to achieve a wide array of product innovations during the previous fiscal year. The company increased market share In several segments. “This is also an indicator for us that we will emerge stronger from the crisis,” said Härter. Primarily in international markets – and particularly in Asia and the Americas – ZF is on a growth path.



Technology lead widened



Despite the difficult business environment in 2009, ZF managed to strengthen its international market position and widen its technology lead. To that end, ZF launched the production of its new 8-speed automatic transmission last year in Saarbrücken. This new engine is 6 percent more fuel-efficient than the previous generation. The first-of-its-kind double clutch transmission with a start/stop feature jointly developed with Porsche is another example of ZF product innovation. It minimizes fuel consumption without a loss of acceleration or performance. ZF hybrid technology has also been available in production vehicles since 2009. For instance, the Mercedes-Benz S-Class hybrid uses the DynaStart hybrid module by ZF Sachs. This module has also been integrated into the 8-speed automatic transmission of the BMW ActiveHybrid 7. As far as smaller vehicle classes are concerned, last year ZF presented a study on a multi-ratio automatic transmission for vehicles with front transverse mounted engines. ZF is also paving the way forward in chassis technology with various engineering studies in weight reduction and feature integration.