ZF Strikes Landmark Deal with Employee Representatives to Reshape Division E for an Enduring Future

Agreement enables restructuring of the Electrified Powertrain Technology division (Division E) that remains an integral part of ZF Group Corporate realignment of Division E to focus on further development of the product range and ecosystem partnerships Comprehensive company-wide measures to strengthen competitiveness with immediate cost savings that will total more than €500 million by 2027 Measures include a 7% reduction in working hours, collective bargaining and company contributions 7,600 job cuts in Division E expected by 2030 Common goal to avoid lay-offs Friedrichshafen, Germany. Following intensive and constructive negotiations within the Alliance for Competitiveness and Job Security, ZF has agreed on a comprehensive package of measures with the company’s general works council and IG Metall union. It has been decided to restructure Division E as integral part of ZF. This joint effort provides comprehensive measures to strengthen competitiveness, coupled with a consistent orientation of the product range and a transparent new path toward possible partial partnerships (“ecosystem”). Passenger car driveline technology will thus remain an integral part of ZF. During the negotiations, contributions from employees in all ZF divisions in Germany were also agreed upon, which will strengthen the competitiveness of the entire company. Mathias Miedreich, CEO of ZF: “With this alliance, we are breaking new ground in the industry and reaching a milestone for ZF. The aim is to strengthen our position as a leading technological player in the market in the long term and to significantly increase our competitiveness. We are aware that the path to this goal will involve tough cuts for our employees. Now it is time to work together to overcome these difficult times for the good of the company. With this alliance, we have set the right course.” Barbara Resch, district manager of IG Metall Baden-Württemberg and deputy chair of the ZF supervisory board: “With this alliance, we have succeeded in creating a clear perspective. On the employees’ side, we have made concessions, that’s true. In return, we expect ZF to position itself as a driver of employment and a guarantor of good working conditions for the future. We will hold ZF accountable to this.” Measures for the Electrified Powertrain Technology division For the Group’s largest division in terms of sales and number of employees, the agreement lays the foundation for a strong position in the global drive market with high system expertise and a differentiated, competitive product range. A carve-out of the entire division is no longer being pursued. Instead, the division will restore the competitiveness of its existing products through restructuring. Ecosystem partnerships for sub-areas of the division would need to provide innovation and growth impulses. As a first step, the existing product range will be re-focused and further developed. Development activities in the product groups including on-board chargers, DC converters, and electric beam axles (eBeam) will be discontinued, while the development of innovative products such as TherMaS, the ZF thermal management system, or the 8HP evo plug-in hybrid transmission will be consistently driven forward. The purchase of electric motors and inverters will be reassessed by the company and employee representatives. Voluntary program and transfer measures A particular focus is on achieving the necessary job cuts through a comprehensive package of personnel measures. The initial focus is on reductions over the next three years, which will be within the range published last year. In addition to existing offers, such as partial retirement, a severance program will be launched, supplemented by training and transfer measures. ZF is supporting employees in the affected areas in their professional reorientation. Collective bargaining and operational cost reductions to overcome the crisis During the negotiations, company-wide measures for immediate cost savings were agreed upon. These will come into effect once they have been approved by the relevant trade union committees. Among other things, the 3.1-percent wage increase for hourly employees in Germany scheduled for April 2026 will be postponed until October 2026. The annual salary review for graded employees will be discontinued. Furthermore, collective bargaining components will be converted into free time or eliminated in the coming years. For employees in Division E in Germany and at the Schweinfurt and Friedrichshafen sites in the Z (administration, research, and development) operation, the weekly working time will be reduced by around 7 percent until the end of 2027. Lea Corzilius, CHRO and Director of Labor Relations at ZF Friedrichshafen AG: “With this alliance, we are making clear decisions and creating transparency for our employees. At the same time, it is a clear commitment to share responsibility on the part of all parties involved. In times of profound transformation, we are breaking new ground through entrepreneurial decisions, comprehensive employee contributions, and close cooperation with the works councils and IG Metall.” Achim Dietrich, Chairman of the ZF General Works Council: “It was crucial for us that the passenger car powertrain – the heart of our company – continues to have a future at ZF and that the carve-out of Division E is off the table. We also see this alliance as a signal beyond ZF that technologies and products ‘Made in Germany` have good prospects. Our common goal is for ZF to regain its self-confidence, for motivated employees to work on innovative products, and for us to be at the forefront of technology.”

ZF Strikes Landmark Deal with Employee Representatives to Reshape Division E for an Enduring Future

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