'We co-financed VW's inefficiencies': German auto industry crisis leads to factory closures in Switzerland

The Swiss automotive supplier SFS Group is set to close its production facility in Flawil by the end of 2027, a move that will eliminate 110 jobs. This decision stems from the ongoing crisis gripping the German automotive industry, which has a significant ripple effect on Swiss suppliers who depend on German car manufacturers.

An employee at the Flawil site expressed surprise at the announcement, stating that the plant's utilization was not poor, suggesting the closure is a strategic decision by the group's management. However, the underlying cause is widely recognized as the downturn in the German auto sector. SFS manufactures precision components used in German cars, and with fewer vehicles being produced, the demand for these parts has diminished.

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We have co-financed the inefficiencies of VW

Volkswagen, the world's second-largest automaker after Toyota, is facing considerable difficulties, including a slump in demand in China, overcapacity in Europe, and an uncertain strategy for electric vehicles. Reports indicate that CEO Oliver Blume plans to cut up to 120,000 jobs. This restructuring at VW and other German manufacturers directly impacts Swiss suppliers like SFS.

While the crisis presents challenges, it could also create opportunities for some Swiss automotive suppliers. However, for others, like the Flawil plant, the situation has become untenable. Anja Schulze from the University of Zurich's Swiss Center for Automotive Research noted that the number of employees in the Swiss automotive supply industry, which was around 32,000 in 2023, has likely decreased further due to these difficult years.

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The announcement of the closure completely surprised the staff.