HANNOVER, Germany -- A German law that allows employers to cut employees' work hours and pay in lieu of layoffs is giving Bosch Automotive Group an advantage as business rebounds.
Bernd Bohr, chairman of Bosch Automotive, said in an interview here last week that the company was able to keep its core engineering staff intact during the downturn.
"We have proved in the crisis that with the German system of having a high degree of labor flexibility without needing to lay off people, we were able to adapt almost fully," Bohr said. The company "kept our experienced team together, which was extremely helpful during the upturn and also was good for the culture and the morale of the employees," he added.
Germany avoided mass layoffs even when it was slumping badly partly because of a program known as Kurzarbeit -- which translates as short work. Kurzarbeit, enacted in 2009, permitted employers to cut working time by up to half -- with employees placed on the short-time work program receiving 60 percent to 67 percent of their net forgone wage from the German Federal Employment Agency.
Bosch was able to persuade Turkey and some eastern European countries to allow similar hours-reduction programs but laid off employees in some nations where the tactic was not permitted.
Rolf Leonhard, executive vice president of engineering for diesel systems, said that as business has revived, his team has benefited from the system. Bosch has acquired new contracts because it showed stability during the downturn, he said.
Bosch Automotive expects a 25 percent increase in revenues this year to 27 billion euros ($35.45 billion), following a 18 percent decline to 21.72 billion euros from 2008 to last year.
Bohr hinted that the company will be profitable this year. Parent Robert Bosch GmbH lost money last year for the first time in more than 60 years.
In a press conference at the IAA Commercial Vehicles show here last week, Bohr said, "It is clear we have returned to the path of growth, and that growth also means a clearly positive result." He said revenues for the parent company will increase 20 percent to about 46 billion euros ($60.40 billion).
"In general, our business figures are approaching their levels from 2007, the previous peak year, more quickly than expected," Bohr said.
Bosch Automotive will add 5,000 employees this year, for a total of 165,000, he said. The supplier also will have added 1,000 r&d employees by year-end in Asia, where it enjoys strong growth, Bohr said.
Robert Bosch GmbH ranks second to Denso Corp. in the Automotive News Europe Top 100 global suppliers listing, based on 2009 revenues.