FRIEDRICHSHAFEN, Germany -- Increased trade barriers between Europe and the United States would be a "significant" threat to his company's business, ZF CEO Wolf-Henning Scheider said, calling for negotiators to reach an agreement to prevent a trade war.
President Donald Trump has threatened to impose 20 to 25 percent import taxes on automobiles, singling out German automakers as contributing to the U.S. trade deficit. ZF could be affected because much of its passenger car business is with premium German automakers such as BMW and Audi. German automakers export about 600,000 vehicles a year to the United States, and the European Union has estimated that a tariff at 25 percent would add an average of 10,000 euros to the price of a European-built car, according to Bloomberg News.
"I cannot imagine any party would be a winner," in a trade war, Scheider said this week at a ZF technology event here. "It's a provocation right now, but let's come to a solution.”
Scheider noted that ZF builds transmissions at its factory in South Carolina for export to Europe, and also exports transmissions from Europe to the U.S.
"We do this to optimize the manufacturing process," he said. "It's the system we've become used to in the past several years."
ZF ranks No. 5 in the Automotive News Europe ranking of global automotive suppliers, with sales of $34.8 billion in 2017. The company makes transmissions, chassis components, steering, braking, and driver assist systems such as cameras, radar and lidar.
Scheider, a veteran of Robert Bosch and Mahle, was named to head ZF this year after previous CEO Stefan Sommer stepped down last December after a power struggle over ZF's $12.4 billion acquisition of TRW in 2015. Scheider said this week that ZF would need to adjust its strategy to increase the company's speed and agility as the automotive industry moves toward electrification, connectivity and autonomous driving.
Scheider outlined how ZF was managing the transition to electrification. The company was one of the sponsors of a study this month that found that up to 75,000 jobs in Germany could be eliminated by 2030 in the shift from internal combustion powertrains to electrified ones. Scheider said that 15,000 ZF factory jobs were at risk "in theory," because of its transmissions business — but noted that transmissions also represented a powerful opportunity to create profits by integrating electrification.
"We will prepare for that situation (widespread electrification) but we still have some time," he said. "We will discuss this together with our works council in a very open manner. I don't have an answer today, but I'm quite confident that we will find a solution."
ZF displayed a range of electrified components, including 48 volt equipped power steering for commercial vehicles, integrated electric axle and brake units for buses, and a small electric bus due to go into production as part of a joint venture called e.Go Mobile.
"ZF electrifies every type of mobility, from the bicycle to the heavy-duty truck,” Scheider said, predicting that electric and hybrid vehicles would reach a critical mass starting in 2025. "We're looking at hybrid drive, full EV and electrification of components in an integrated way."
Scheider announced changes to ZF’s executive board. Peter Lake, who joined the board as head of sales and marketing from TRW in 2015, will be leaving when his term expires on Sept. 30, and his responsibilities will be redistributed among other board members. A new, unified sales function will report directly to Scheider, ZF said in a news release. Juergen Holeksa, board member for human resources, will also be leaving Sept. 30 "at his own request," ZF said.
"Peter Lake made a vital contribution to making the ZF-TRW integration a success," supervisory board chairman Franz-Josef Paefgen said, praising Lake's contributions in reorganizing global sales and marketing. "Moreover, for the more than 60,000 TRW employees, he was an important unifying figure."