- Auto experts warn of “generational layoffs” in the car industry.
- Silicon Valley could take a lesson from Detroit this time around.
- The shift to electric vehicles will spur more layoffs in the coming years.
After avoiding massive job cuts in the tech sector earlier this year, car companies are starting to rationalize their workforces with waves of buyout packages and layoffs.
But the downsizing wave affecting the automotive industry isn’t the same as one looming tech giants like Google, Meta and Microsoft.
Tech executives are blaming over-hiring, fake work and other excesses of the last decade’s economic boom for the need to thin the ranks. The automotive industry, on the other hand, is undergoing a decades-long transition to electric vehicles, which will eliminate some jobs at the same time it creates jobs that didn’t exist just a few years ago.
General Motors last week announced a sweeping buyout program that would cover the majority of its salaried workforce in an effort to “accelerate acceleration” and save $2 billion in the transition to electric vehicles. GM’s buyout package comes after months of smaller layoff announcements from rivals Ford and Jeep-maker Stellantis.
Chris McCarthy, global transportation lead at management consulting firm North Highland, called these waves of downsizing in the auto industry a “generational takeoff,” which is different from what’s happening in the tech world right now because some of these jobs are being lost to newcomers. is being changed. ,
“We’re seeing layoffs in one area and growth in another,” McCarthy said. He said that compared to downsizing in Silicon Valley where AI and other technology is making it easier to do more with fewer people. “The auto industry is still in great need of employees with skills in software programming and engineering.”
Martin French, managing director of consultancy Beryls, told Insider that it’s going to be a difficult equation to balance in the years ahead.
“If you look at the tens of billions earmarked for electrification and compare that with what these companies have actually been doing over the years, it just doesn’t add up,” the Frenchman said. “I think this is just the first wave.”
Silicon Valley takes a lesson from Detroit
Layoffs and buyouts are nothing new to the automotive industry, especially over the past few years. Car companies that came out of the 2009 economic collapse began restructuring their workforces in good economic times, cutting thousands of jobs in the boom years of the pandemic.
In French’s view, the tech industry is taking a page from Detroit’s playbook as it shrinks its ranks this year. He is skeptical of the claim that tech companies are already victims of an economic downturn, and instead believes that these companies are in for the worst before a true “bloodbath”.
“Is it really an economic downturn? Or is it that companies are just saying, you know, it’s time to be a little smart and lean?” French said. “Tech companies are moving ahead of what automotive companies have done in the past and trying to make up for that downturn before it really hits.”
GM underwent a global restructuring in 2019 that cut thousands of jobs and closed factories across the country. Ford cut some 7,000 jobs that same year as part of its shift to electrification. Both companies said at the time that they were taking advantage of good economic times to cut staff on a strategic basis.