From the New York Times, November 10:
The downturn in the automotive industry has done away with services and benefits that residents of Friedrichshafen, a lakeside city, once enjoyed.
Few German cities are feeling the crisis in the automotive industry more acutely than Friedrichshafen, which sits on the picturesque shores of Lake Constance. For more than a century, life here has been intertwined with ZF Friedrichshafen, a major supplier of transmissions and other auto parts.
To call it a “company town” doesn’t quite do justice to the relationship. Through a foundation, the city owns more than 90 percent of ZF, which is also the area’s largest employer. In good years, profits from ZF supplied the city with more than a hundred million euros annually for swimming pools, kindergartens and even a bridge.
But that largess has withered away.
ZF is suffering from a major industrial upheaval because of the rocky global shift to electric vehicles and intense competition from Chinese automakers. Last year ZF lost €2.1 billion, or $2.3 billion. The company is cutting up to 14,000 jobs in Germany, about a quarter of its domestic work force.
Profits that ZF funneled to the foundation dwindled to €41 million last year and will be zero this year. The money is not expected to begin flowing again until the end of the decade, at the earliest.
Friedrichshafen, where tourists stroll the banks of the lake that sits between Germany and Switzerland, has had to cut back services that many people took for granted. Last year parents staged a protest outside city hall after child care fees, which were largely paid for by ZF profits, jumped to €450 per month from €158.
“We used to benefit a lot” from the foundation, Simon Blümcke, the city’s mayor since 2024, said in an interview. His predecessors could afford private drivers. Mr. Blümcke, who also sits on ZF’s supervisory board, has cut that luxury as well as projects like a planned railroad underpass.
“Now,” he added, “we are completely redoing our municipal strategy.”
Variations of this scenario are playing out across Germany. It is unusual for a city to own such a large company. But it is not unusual for local economies to revolve around a single large manufacturer.
Stuttgart has Mercedes-Benz, which is asking workers to put in extra hours without extra pay and last month issued a profit warning. The city is also home to Porsche, whose profit has all but evaporated. Munich has BMW, which plans to cut 20 percent of its managers. Wolfsburg revolves around Volkswagen, which is cutting up to 100,000 jobs and may close four German factories.
Outside those major cities, countless smaller communities depend on suppliers, which form the backbone of the German economy. The state of Baden-Württemberg, which includes Friedrichshafen, has a particularly dense concentration of these specialized “Mittelstand” companies.
The challenges facing Volkswagen, Mercedes and BMW reverberate at suppliers like ZF. The number of people employed in German auto manufacturing has fallen to 691,500 this year from 834,000 in 2018, according to official figures. Experts expect the number to continue to decline.
