Stihl Shifts Focus to Electric Chainsaws, Resulting in Job Cuts

In response to the growing demand for electric tools, Stihl, the renowned German chainsaw manufacturer, is transitioning its product line to electric models. This shift will lead to the elimination of 500 jobs, with a significant impact on its operations in Germany.

Stihl has reported that approximately 25% of its sales now come from electric-powered chainsaws, hedge trimmers, and leaf blowers, as opposed to traditional gasoline engines. This change is attributed to the ease of use that electric tools offer, particularly for novice users, allowing better control over cutting speeds.

The company's sales figures indicate that electric devices have already gained a dominant market position in Western Europe, accounting for around 60% of sales in Germany and Switzerland. Stihl's CEO has stated that by 2027, the company aims to increase the share of electric products to 35% of total sales, a bold move for a nearly century-old company that has primarily relied on gasoline engines.

To support this transformation, Stihl is investing heavily in its manufacturing capabilities. The company is allocating EUR53 million to expand its battery production facility in Virginia Beach, USA, and is building a new plant in Oradea, Romania, dedicated to manufacturing electric devices and their batteries, with an investment of EUR100 million. Additionally, EUR133 million will be invested at its headquarters for the production of electric motors.

Despite facing numerous challenges, including a cautious consumer market and ongoing geopolitical tensions, Stihl managed to achieve a slight revenue increase of 1.1%, reaching EUR5.33 billion. However, the company refrained from disclosing profit figures, instead highlighting its financial independence as a testament to its profitability.

The German facilities, which include eight factories in and around Waiblingen, as well as sites in Weinsheim and Wiechs, are responsible for generating EUR1.63 billion in revenues, contributing over 30% to the overall sales. A portion of Stihl's products is manufactured exclusively in Germany, or components produced there are supplied to international plants.

Looking ahead, Stihl's leadership anticipates modest growth in revenue, projecting increases in the single-digit percentage range. This forecast comes as the company has reduced its workforce from 21,600 employees in May 2023 to 19,700 currently, with further job cuts anticipated. The shift towards electric production may prompt Stihl to move more manufacturing operations overseas, as conditions for producing electric products in Germany may not be favorable.