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.
Over the last six months, automakers have announced roughly 38,000 job cuts as part of global restructuring efforts. While such things are typically part of the normal ebb and flow of the industry, the ebb could be a prolonged one as manufacturers seek ways to mitigate the high cost of tech and figure out what their businesses should look like in the 21st century.
A litany of other issues are impacting jobs. China’s economy turned out to be less stable than presumed, trade tensions have escalated in practically every major market that builds cars, and most of the developed world appears to be nearly tapped out in terms of sales growth.
As a result, analysts are growing concerned that the layoffs we’ve seen thus far are just the beginning. But they’re not the only ones. Industry insiders are also willing to admit that times are changing — and rather drastically.
Opioid addiction is on the rise in America and the United Auto Workers wants to confront the problem in its next round of collective bargaining. While the issue is most visible in parts of the Western United States, large pockets of the Midwest, South, and Northeast have cited an influx of drug overdoses since 2002.
The UAW, knowing that prescription medications are being increasingly abused by factory workers (as heroin simultaneously makes a comeback), wants to nip the issue in the bud. In addition to promoting job security, higher wages, and healthcare, union officials have identified combating opioids as an important element of future contract negotiations.
President Donald Trump weighed in on General Motors again this week. This time, the issue at hand was the fate of Lordstown Assembly — which was shuttered earlier this month as part of the automaker’s ongoing restructuring program.
“Just spoke to Mary Barra, CEO of General Motors about the Lordstown Ohio plant,” Trump tweeted on Sunday. “I am not happy that it is closed when everything else in our Country is BOOMING. I asked her to sell it or do something quickly. She blamed the UAW Union — I don’t care, I just want it open!”
Barra’s take on just how much the United Automobile Workers are to blame is questionable, but the president’s position is not.
While the Trump administration is carefully considering whether or not imported vehicles qualify as a threat to national security, and prepares for trade negotiations with Japan, Toyota is being very careful about how it comes across in America. Last week, the automaker announced plans to add about 600 jobs across the Southern United States — raising its proposed American expansion by another $749 million. In total, the company is expected to expend $13 billion inside the U.S. by 2022.
“In a time when others are scaling back, we believe in the strength of America and we’re excited about the future of mobility in America,” Jim Lentz, CEO of Toyota Motor North America, said of the decision.
Throwing some casual shade at other automakers who are cutting down their domestic workforce is a sound PR strategy but, according to Toyota, its increased investment has nothing to do with global or industrial politics.
Volkswagen Group just announced a restructuring plan aimed at raising the company’s operating margin to 6 percent. Unfortunately, the strategy involves a staffing reduction of up to 7,000 individuals by 2023 — with the automaker saving an estimated 5.9 billion euros in the process.
While legitimate layoffs aren’t expected to take place for at least a few more years, VW claims the “automation of routine tasks” will make the jobs unnecessary, adding that the staffing cuts could be done by simply not replacing employees who take an early retirement package.
Alphabet’s self-driving arm, Waymo, announced plans for a Michigan expansion on Tuesday. The company is currently seeking a location in the southeast section of the state and intends to hire up to 400 employees over the next five years.
According to a corporate blog post, the new new hires will be tasked with installing autonomous driving systems on vehicles built by Fiat Chrysler Automobiles and Jaguar Land Rover ahead of those vehicles entering the firm’s growing fleet.
“We’ll be looking for engineers, operations experts, and fleet coordinators to join our team and help assemble and deploy our self-driving cars,” the blog explains. “This will be the world’s first factory [100-percent] dedicated to the mass production of [Level 4] autonomous vehicles.”
On Thursday, Ford announced preliminary details of a plan that will ultimately erase thousands of European jobs in an attempt to return the business to profitability. The decision comes after several reports indicated the automaker’s restructuring program will be particularly hard on the region.
The plan now officially includes a slimmer product lineup, which is likely to result in the shuttering of several facilities. The manufacturer also announced a “leveraging” of existing relationships — specifically referencing a potential alliance with Volkswagen Group that would help support Ford in that market.
“We are taking decisive action to transform the Ford business in Europe,” explained Steven Armstrong, group vice president and president of Europe, Middle East and Africa. “We will invest in the vehicles, services, segments and markets that best support a long-term sustainably profitable business, creating value for all our stakeholders and delivering emotive vehicles to our customers.”
What does Ford think it needs to do to achieve a 6 percent operating margin in Europe? Read on.
It’s been roughly a month since General Motors announced it would be shuttering Oshawa Assembly, leaving the facility’s nearly 3,000 employees and Canada’s auto union more than a little annoyed. Unifor leadership has said it intends to meet with GM executives on December 20th and discuss the automaker’s plans for the Oshawa facility in Detroit. However, the rhetoric coming from union head Jerry Dias makes the upcoming meeting sound more like a mafia hit than a labor negotiation.
“GM is leaving Canada, and we’re not going to let them,” Dias told reporters. “We are going to waste General Motors over the next year. Waste them.”
As part of Ford’s massive restructuring plan, which is said to focus primarily on its European assets, the automaker will end assembly at its Blanquefort transmission plant in France next year. Its 850 employees will now have to find gainful employment elsewhere by August.
However, there was a brief glimmer of hope after transmission supplier Punch Powerglide (encouraged by the French government) launched a bid to purchase the facility and rescue it from being shuttered.
“Despite thorough and rigorous talks over the past nine months, and the best efforts of both sides, the plan put forward by the potential buyer presents significant risks,” Ford said in a statement. “We do not believe that the prospective buyer’s plans offer the level of security or protection, or limit the risk of possible future job losses, that we would like for the employees.”
Ford Europe announced it had shuffled its leadership on Friday as part of a larger restructuring plan, appointing executives in Germany and the United Kingdom to oversee “ Sprint to 6 Reset and Redesign.” The strategy seeks to achieve a 6 percent EBIT (earnings before interest and taxes) margin, investing only in products and services that it believes best support long-term, sustainably and profitable business.
“Ford is implementing key leadership and organizational changes to improve the fitness and agility of its European operations as it undergoes a fundamental reset and redesign of its business,” the company said in an announcement that emphasized creating operational agility.
While the full scope of the plan has yet to be announced, layoffs and factory closings seem highly probable. Ford said announcements concerning the details of the restructuring are expected between now and the beginning of 2020. Europe is expected to be the primary focus during the initial months, however. Ford Europe lost nearly $250 million in the third quarter of 2018, significantly worse than it managed in 2017. The company now expects to see a net loss for the region this year.
Earlier this week we mentioned that Ford’s restructuring plan might closely mimic General Motors’ strategy — resulting in widespread job losses. That theory was backed by an analysis from Morgan Stanley, which presumed the Dearborn-based automaker is likely to surpass GM in terms of layoffs, based on how much each intends to free up. Back in July, Ford said it would spend roughly three to five years on its $11 billion restructuring. All told, the financial services company believes the Blue Oval might shed at least 25,000 positions.
In the report’s wake, Ford CEO Jim Hackett is urging everyone not to panic. On Tuesday, he said Ford never provided numbers to Morgan Stanley analyst Adam Jonas, who estimated the significant employee reduction just one day earlier.
Ford’s decision to abandon sedans and non-utility hatchbacks is quickly coming to a head. While the choice rubbed many of us the wrong way, we attempted to view the situation through the lens of business and urged everyone not to panic if they wanted to purchase a Fusion or Focus sedan before they were all gone.
While we’re still not going to tell you not to panic, you might want to start making some moves if you’re still interested. Michael Martinez, Automotive News’ go-to guy for all things Ford, just claimed that the automaker only has about 12,000 Focus sedans left in its inventory.
During Fiat Chrysler CEO Sergio Marchionne’s final days, he said his company would begin prioritizing Jeep production in Europe. This of course comes at the expense of the Fiat brand, which lost a sizable hunk of the European market after 2009 and appears to be outright failing in the United States.
While the brand gained back some of that lost ground east of the Atlantic over the past two years, Fiat’s Jeep stablemate took off like a rocket after 2013 — effectively tripling its share of the European market. Eager to cater to the ever-changing tastes of consumers, FCA is going to stick with Jeep and make some money. As a byproduct, the company thinks it may be able to revitalize Italy’s manufacturing industry, bolster overall volume, and get some laid-off employees back onto the factory floor.
However, it’s not just Jeep that’s getting special treatment. FCA intends to do the same for Alfa Romeo and Maserati, as their products boast higher margins than anything Fiat builds.
Automotive trade groups have issued warnings about the scrapping of the North American Free Trade Agreement all year. In January, the Center for Automotive Research claimed killing NAFTA could result in the elimination of at least 31,000 auto jobs within the United States. This week, a new study sponsored by the Motor Equipment Manufacturers Association upped that estimation to around 50,000.
With early negotiations not going particularly well at the moment, the new tally serves as a potential warning. If NAFTA is abandoned, North American countries would all likely revert to rules dictated by the World Trade Organization, resulting in higher tariffs from all sides.
While 50,000 fewer jobs is the upper echelon of what could be expected, a few things have to go wrong for it to reach that point. First, Mexico and Canada would have to revert to pre-NAFTA tariff levels — which were comparably higher than the United States. If so, manufacturers would almost assuredly begin sourcing more parts from the same countries where the vehicles are assembled, and gradually move production to lower-cost regions like China.
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- Dusterdude The suppliers can ask for concessions, but I wouldn’t hold my breath . With the UAW they are ultimately bound to negotiate with them. However, with suppliers , they could always find another supplier ( which in some cases would be difficult, but not impossible)
- AMcA Phoenix. Awful. The roads are huge and wide, with dedicated lanes for turning, always. Requires no attention to what you're doing. The roads are idiot proofed, so all the idiots drive - they have no choice, because everything is so spread out.
- Leonard Ostrander Pet peeve: Drivers who swerve to the left to make a right turn and vice versa. They take up as much space as possible for as long as possible as though they're driving trailer trucks or school busses. It's a Kia people, not a Kenworth! Oh, and use your turn signals if you ever figure out where you're going.
- Master Baiter This is horrible. Delaying this ban will raise the Earth's temperature by 0.00000001°C in the year 2100.
- Alan Buy a Skoda Superb.