June 11 (Bloomberg) -- Schaeffler AG, the biggest shareholder in car-parts maker Continental AG, will phase out production of wheel bearings at a German factory, eliminating 576 jobs because of high costs and tough competition.
Manufacturing of the components at a plant in Schweinfurt will wind down over the next two to three years, Marcus Brans, a spokesman for the Herzogenaurach, Germany-based company, said today by phone. The move comes after the company didn’t win new orders for the parts, he said.
Schaeffler is keen to maintain profit margins as it explores options to ease the debt burden stemming from its investment in Continental. The company reported an 11 percent drop in first-quarter earnings on weaker demand for industrial goods. Net debt amounted to 6.8 billion euros.
Schaeffler will maintain 300 jobs at the site. The company will try to avoid firings and will offer early retirement packages, Brans said. Negotiations with the unions have started. The manufacturer employs about 29,000 people in Germany, about 38 percent of its global workforce.
DPA-AFX reported earlier on the shutdown at the site.
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