Auto Industry Eliminating Jobs to Support Electric Vehicle Tech: Report

With environmentalism sweeping through the automotive industry of late, manufacturers are spending oodles of cash to fund the continued development of electric vehicles. Unfortunately, the are doing this during a period where the developed world’s taste for cars has already reached its zenith — or so it seems. Growth is slowing in markets across the globe and cuts have to be made somewhere if the industry players want to keep their bottom line positioned firmly in the black.

A recent report from Bloomberg, estimated that around 80,000 auto jobs will be eliminated in the coming years as a result of electrification — with the majority concentrated in the United States, Germany, and United Kingdom. Though the onslaught of cuts will not be limited to the developed world, nor entirely the fault of EVs.

Last week, Daimler announced it would have to sacrifice at least 10,000 jobs (10 percent of which will be related to management) so it could save roughly $1.5 billion over the next three years. “The automotive industry is in the middle of the biggest transformation in its history,” the company stated in its announcement. “The development towards CO2-neutral mobility requires large investments, which is why Daimler announced in the middle of November that it would launch a programme [sic] to increase competitiveness, innovation and investment strength.”

A day earlier, Audi did the same — saying it would need to cut 9,500 jobs by 2025 (about 10 percent of its global workforce). On the upside, it wagered it could create 2,000 via new technologies. But that still works out to a net loss of 7,500 employees.

Domestic manufacturers, that have begun pivoting to electric vehicles while investing billions into expansive mobility projects, are also suffering. Both Ford and General Motors have said they would be eliminating thousands of jobs. GM’s restructuring plan, announced in November of 2018, will ultimately shrink its North American work force by 15 percent. Meanwhile, Ford is looking at dumping 10 percent of its global staff to help it brace for the future — with at least 12,000 positions being lost in Europe alone.

Line workers are already fearful of automation, but the prospect of manufacturers adding more electric vehicles to their lineup is adding to those concerns. EVs typically need fewer parts than internal-combustion models, often requiring less hands to cobble together. The issue was even touched upon in the Trump administration’s plan to scale back existing emission requirements, suggesting that pushing electrification would risk American jobs. While that seems to be a valid concern, it’s not the only reason for the sweeping cuts. Many markets simply appear to have plateaued — and not just in the West.

From Bloomberg:

Cuts are also being carried out in China, which employs the largest number of people in the industry and has been mired in a sales slump. Electric-vehicle startup NIO Inc., which has lost billions of dollars and watched its New York-listed shares plummet, dismissed about 20 [percent] of its workforce by the end of September, shedding more than 2,000 jobs.

“The persistent slowdown in global markets will continue to dent automakers’ margins and earnings, which have already been hurt by increased R&D spending for autonomous-driving technology,” said Gillian Davis, an analyst with Bloomberg Intelligence. “Many automakers are now focused on cost-saving plans to prevent margin erosion.”

Being an early leader in electrification hasn’t spared Nissan, which has been in turmoil since the arrest of former Chairman Carlos Ghosn a year ago.

With profits plumbing decade lows, the Japanese automaker is shedding 12,500 positions in the coming years, mostly at factories across the globe, to reduce costs as it rushes to refresh an aging model lineup. A redesigned version of the battery-powered Leaf, which debuted later than planned because of the loss of the company’s longtime leader, isn’t giving the company much of a boost this year.

China’s issues are a bit more complicated, however. The PRC funded countless EV startups in a blanket approach to gain a strong lead on the burgeoning EV industry. Nobody expected all of them to stand the test of time. But the country has also implemented rolling emission laws that has frightened away consumers unsure as to the legality of older vehicles. China’s trade war with the United States has further complicated things while raising manufacturing and shipping costs around the globe.

Regardless of how multifaceted the reasons for the widespread staff reductions may be, workers are deeply unhappy and have been voicing their distaste. This year’s labor negotiations with General Motors resulted in a 40 day strike (the longest in decades). On November 22nd, around 15,000 people marched in Germany to protest job cuts in Stuttgart. Germany’s ludicrously powerful labor union, IG Metall, has even suggested that positions are being eliminated so automakers can boost profits and are just using the pricy transition to EVs as an excuse.

That will be difficult to prove, even if the accusations are true. But union leadership has claimed all people need to do for evidence is look to the reasons automakers are giving for staff reductions. For an example of what they’re referencing, let’s go back to the start of this year when General Motors explained the modus operandi for its vast restructuring efforts.

“These actions are necessary to secure the future of the company, including preserving thousands of jobs in the U.S. and globally,” GM spokesman Pat Morrissey said. “We are taking action now while the overall economy and job market are strong, increasing the ability of impacted employees to continue to advance in their careers, should they choose to do so.”

Other automakers have issued similar statements, often suggesting it’s better to slash jobs now than wait until the industry is in a worse spot or laid-off employees find themselves in the midst of a brutal recession. But it doesn’t change the fact the industry is hemorrhaging jobs and people are demanding answers, if not a satisfactory solution to the growing employment problem.

[Image: General Motors]