In order to “avert damage to the company”, German family-owned automotive and E&E supplier Kostal (Lüdenscheid,; www.kostal.com) plans to close all three German production facilities of its automotive electrics business unit KAE. This is expected to affect administration, production, and plastics processing in Lüdenscheid, home to of 650 employees, and at smaller sites in Meinerzhagen with its 90 workers and Halver with its 60. The group employs 18,500 staff.

By 2024, a large proportion of jobs is to be relocated abroad, both in and outside the European Union, with Hungary playing a key role in the plans: Kostal is currently also setting up its first international administrative office in Budapest, where 360 jobs are to be created.

Managing partner Andreas Kostal cited the availability of skilled workers in Hungary as a decisive factor in choosing the location without providing any further details. However, the company said development at KAE and the business units for Industrial Electrics, Connectors, and Solar Electrics will not be affected by the change.

In 2018 and 2019, Kostal carried out what it described as “significant job cuts in the triple-digit range” at the plants now set for closure. However, the measures turned out to be insufficient enough to ensure competitiveness, according to a statement. Group COO and KAE MD Hansjörg Herrmann summed the situation up by saying that no profitable business could be achieved with German production costs, and that large losses were being made. In such a situation, the ideals in a 2018 image film outlined by family man Andreas Kostal apparently only to apply to a limited extent: “The way we treat our employees is deeply down-to-earth and sustainable.”

For Lüdenscheid mayor Sebastian Wagemeyer, the decision comes as “a shock and a heavy blow in several respects” that would also have an impact on other local companies. In a video message, he called on Kostal to find quick and unbureaucratic solutions for the employees and said he expects this from the largest and most important employer in the city. At the same time, Wagemeyer – like Fabian Ferber from German labour union IG Metall – criticised the relocation to Hungary. The country no longer adheres to the EU’s core values and has a profound disrespect for environmental standards and co-determination, he said.

The German union now wants to examine the company’s documents and make proposals for preserving jobs, something Ferber confirmed during an interview with Plasteurope.com. The works council also has called in an economic consultant. “We keep talking about secure supply chains and then the products are to come from Eastern Europe or China?”, asked Ferber. The goal of CO₂neutrality also speaks against longer supply routes, the union rep said.

“We are convinced that these jobs could be retained,” he noted. “After all, other companies manage to do it too.”

The KAE unit is the main pillar of the group. The division reported 2021 sales of EUR 2.4 bn, which compared to total company sales of EUR 2.8 bn. The remaining EUR 400 mn is distributed among the other segments, including the large-scale production of inverters for photovoltaic systems. A competitor in the automotive sector is Preh (Bad Neustadt, Germany; www.preh.de), which also makes electronic control elements.

The company declined to provide details to Plasteurope.com about plastics processing in the group apart from that it both purchases parts and processes them itself. However, injection moulding applications such as steering column switches, camera housings, controls, and gearshift levers in particular are likely to play a major role. According to a patent application, polymers processed include cyclo-olefin copolymers, SAN, polycarbonate, polycarbonate copolymers, and PMMA.

For controls in the centre console, door armrests, and headliners, the company uses products and technologies such as back-moulded films, multi-component and sandwich processes, foam injection moulding, and polyurethane systems.

Plastics processing operations for automotive electrics and connector production cannot be clearly separated. Among other things, Kostal Kontakt Systeme operates an injection moulding competence centre in Dresden. The extent of the machinery used remains unclear.