If global automotive manufacturing were its own country, it would be the sixth largest economy in the world, a technical job-placement firm, Fircroft, declared in one of its report on the industry.
This finding was made in 2017, when the new vehicles sales worldwide (LCVs and passenger cars) stood at 86.05 million units with global industry employing around 15 million highly skilled workers.
Fast forward to December 2019 and the situation on both new vehicle sales and jobs front has turned grim. Things started worsening when General Motor (GM) announced its plan to cut 14,000 jobs and shutting down of seven of its plants, five of which are built in North America. Though the announcement came sometime in November 2018, but the majority of ‘restructuring’ was undertaken in 2019.
Another Detroit automaker Ford Motor is in the process of performing massive downsizing at its production plants in Europe and the US.
In June, the company announced the elimination of about 12,000 contractual workers in Europe by the end of 2020. This was in continuation of the company’s global restructuring program where it cut off about 7,000 salaried employees, more than 32 per cent of which laid off in the US alone. The total workers employed by Ford across the globe stood at 199,000 at the end of last year.
UK is one of the worst affected markets, which is reeling under the prolonged uncertainty of Brexit. One in three car firms are cutting jobs and one in eight have divested from their UK businesses in a sign that Brexit is already causing damage to the sector, as per an article published in The Guardian in October.
Notably, about 14 per cent of companies, including manufacturers, components and services companies, in UK car industry have already relocated, as per a survey by the Society of Motor Manufacturers and Traders (SMMT).
On one hand, companies like Jaguar Land Rover and Nissan are cutting production and jobs, other car giants like Ford and Honda has decided to wind up their plants. Ford plans to close its Bridgend plant next year, with the loss of 1,700 jobs whereas Honda said it would close its Swindon plant by 2021, with the loss of about 3,500 roles.
The two biggest car market and fastest-growing economies of Asia- China and India are also facing the massive job crisis within the sector.
In August, the apex auto industry body, Society of Indian Automobile Manufacturers’ (SIAM) revealed that around 2.30 lakh auto sector jobs have been lost. This includes a job loss of around 1 lakh temporary workers in the country’s auto component segment till July this year.
Due to ongoing downturn in China, the auto sales in the country dropped for 17th consecutive month in November. In case of China, companies like Ford and Hyundai are shrinking their operations due to tariff-war with the US.
In January this year, Hyundai eliminated 1,500 jobs at its Beijing manufacturing plant, citing a decline of 23 per cent in sales for 2018.
While some are blaming synchronised slowdown in global economy, others are pointing the advent of electric era as a culprit. Automakers have already announced slashing of more of 80,000 workforce thus far in 2019, with most concentrated in Germany, the US and the UK, according to data compiled by Bloomberg News.
“Although the cuts are concentrated in these developed countries, faster-growing economies haven’t been immune and are seeing automakers scale back operations there,” the report added.
According to et auto reports, Latest announcement in the series of downsizing due to electric overhaul came from Daimler AG, parent company of Mercedes-Benz, plans to reduce 10,000 jobs during the next three years as the company restructures to prepare for an electric future and a smaller earnings.
Citing similar reason, Audi has also announced major cuts this week of close to 9,500 jobs.
