It is not as if only the Indian auto industry is mired in trouble. It appears to be a global phenomenon if you go by the report put out by Bloomberg News. In all, over 80,000 employees in the automotive industry in different countries will find themselves out of their jobs, thanks largely to the paradigm shift in the industry. The trend is shifting towards the electric powered vehicles and if the auto makers do not make all the changes needed in their assembly lines now, they will be left far behind in the market stakes in the future. The job cuts are happening in the USA, Germany and the UK which have some of the powerhouses in the automobile business. There are reports of job cuts in the automobile industry in China even.
In Germany alone, Daimler AG and Audi have announced reduction in their workforce by 20,000. This announcement has come through last week. In the US, companies like General Motors Co, Ford Motor Co and Nissan Motor Co have already carried out massive restructuring of their manufacturing plants and the staff. Nissan, though having its nose ahead in the race for electric powered cars, is likely to axe 12,500 of its workforce globally.
The global slump in the industry is exemplified by a drop of 6% in the production of cars and light vehicles in 2019 as compared to last year. The figure will be around 88.8 million, according to one estimate.
The switch to the electric cars manufacturing does not come cheap. Each company has had to spend millions of dollars in research and development in coming up with new technology, models and designs.
The auto makers are also having to face the wrath of the workers’ unions. There was a prolonged strike at General Motors while there have been massive demonstrations in Germany as well. Many unions are claiming that the companies are using the electric vehicles as a ruse to cut down on the worker count. They believe the managers in these companies failed to read the writing on the wall and the poor employees are now forced to pay the price and that is not acceptable to them.
Another report compiled by Cologne, Germany based Center of Automotive Management says that as many as 1,50,000 automobile jobs could be at risk in Germany alone. This is for the coming few years.
The powerful United Auto Workers union, AUW has been holding negotiations with the auto majors trying to salvage the situation. Their fear is compounded by companies closing down their manufacturing plants and consolidating the operations in fewer locations in order to cut costs.