Factory closures sweep Czechia, putting thousands of jobs at risk

A wave of factory closures is sweeping across Czechia, impacting thousands of workers and signaling broader economic challenges in key industries. Rising costs, global competition, and shifts in consumer behavior are prompting companies to streamline operations or relocate production. An economic downturn in neighboring Germany is also exacerbating the situation, with ripple effects felt across Czechia’s manufacturing sector.

The Mitas tire factory in Prague, operated by Yokohama Rubber Company (YRC), will cease production by June 2025, marking the end of a 90-year legacy. The plant, which specializes in off-road tires for agricultural machinery, has been deemed inefficient and reliant on outdated processes, according to YRC. Approximately 270 workers will be affected.

Mitas continues to operate production plants in Zlín, but the company has significantly reduced its output in recent years. YRC cited inflation and rising operational costs as key factors making the Prague plant unprofitable. Production will be relocated to other YRC facilities as the company adapts to evolving consumer demands and focuses on innovation and digitalization.

German food manufacturer Dr. Oetker will also shutter its Kladno plant this year, resulting in 114 layoffs from its 188-strong workforce. Rising employee, energy, and raw material costs, coupled with the plant’s inability to modernize, were cited as reasons for the closure. The Kladno facility is the firm’s only production plant in the entire Czech Republic.

"The situation on the retail market has changed significantly in recent years due to the forced increase in costs. Food manufacturers are exposed to ever-increasing economic pressure," the company said.

The plant, operational since 1998, produced baking ingredients, mixes, and desserts. Administrative operations will continue to ensure product distribution in the Czech market.

American-Irish automotive seat manufacturer Adient will close its plants in Česká Lípa and Stráž pod Ralskem (both Liberec), eliminating 1,100 jobs over the next two years. The closures are part of a broader restructuring effort driven by declining market volumes, the transition to e-mobility, and rising labor costs.

"The automotive industry is undergoing significant transformation, with suppliers facing fundamental challenges," said an Adient representative. The Česká Lípa plant is set to close by late 2026, while the Stráž pod Ralskem facility will cease operations earlier that year.

Economic and industrial woes in Germany have led to the planned closure of several plants belonging to major car manufacturers. This is expected to affect several factories near the Czech-German border, including those in Zwickau, Dresden, and Chemnitz.

“The situation is serious because consumer demand has slowed in Western Europe,” Radek Špicar, vice-president of the Czech Union of Industry and Transport, said in 2024. He explained that the automotive sector’s shift toward clean mobility and regulatory costs and fines has increased economic pressure.

Separately, German automotive parts manufacturer Schaeffler may also cut jobs in Czechia. In November last year, it announced plant closures in Austria and the UK, with more shutdowns likely. In Czechia, it operates plants in Lanškroun and Svitavy, both in the Pardubice region.

Car-parts manufacturer Bosch, which also operates in Czechia, recently announced 5,500 job cuts. A new analysis predicts insolvencies in Germany could rise by up to 40 percent (particularly affecting the automotive sector) and will send ripples of worry across Czechia.

These closures underscore the challenges facing Czechia’s manufacturing sector, long a cornerstone of the nation’s economy. While some companies, including YRC and Dr. Oetker, have pledged support for affected workers, the closures also highlight the need for retraining programs and investment in modernized facilities to sustain employment and competitiveness in the region.