June 6th, 2018 by Steve Hanley
The respected Fraunhofer Institute of Industrial Engineering was asked recently by trade unions and auto manufacturers in Germany to determine what the impact the switch from conventional cars to electric cars will be on the labor force. There are currently 840,000 manufacturing jobs in Germany in the automotive sector. Of those, 210,000 involve the process of assembling internal combustion engines and transmissions.
Assuming 25% of all cars will be electric by 2030, with 15% hybrids, and 60% still gasoline or diesel powered, Fraunhofer estimates 75,000 workers in the powertrain assembly field will lose their jobs. If the adoption of electric vehicles is higher than 25%, job losses could be as high as 100,000 workers, according to Reuters. The study was based on input provided by Daimler, BMW, Volkswagen, and Tier One suppliers Bosch, ZF, and Schaeffler.
“By 2030, every second job in passenger car powertrain will be impacted directly or indirectly by electromobility,” said IG Metall, one of the industry’s largest trade unions. Union head Joerg Hofmann told the press after the results of the study were released, “Politicians and industry now need to develop strategies to manage this transformation.”
Hoffmann is entirely correct. Although the switch to electric cars will be good for the Earth’s environment, it will cause severe economic dislocation for tens of thousands of people. While the focus is on expanding charging infrastructure and building better EV batteries, the people affected by changes in the economy must be provided for. That is the proper role of governments but one that is often overlooked or given a lower priority than it deserves.
Bernd Osterloh is the chief labor representative at Volkswagen. He tells Reuters thaty electric car powertrains have only one sixth as many components as those found in internal combustion powertrains, which means electric cars take 30% less time to assemble than traditional passenger cars. A battery factory requires only a fifth as many workers an engine assembly plant, he says.
Of course, the idea that electrics will only account for 25% of the automotive market by 2030 may be entirely too conservative. With entire nations threatening to ban the sale of cars with internal combustion engines by that date, the number of electric vehicles being manufactured each year could easily be 50% or more, causing even more economic dislocations in the manufacturing sector.
Peter Cammerer, head labor representative at BMW, sounded another cautionary note after the study was released. He cautioned the German auto industry not to give away technology and know-how to Chinese, Korean and Japanese competitors. While Germany is leading in battery cell research, he says the nation is parceling out battery contracts to foreign suppliers. “We need to be selling innovations to the Chinese and not the other way around,” Cammerer said. His warning comes at a time when Asian battery companies are planning a major expansion of their production facilities in Europe.
The loss of manufacturing jobs in engine and transmission factories is only one of the major changes taking place in manufacturing today. Robots and artificial intelligence are threatening to make human workers irrelevant. The march of progress can’t be stopped any more than King Canute could command the tide to stop rising. Society will need to rethink the whole idea of work as automation takes over more and more jobs. The answer to the projected job losses in Germany is not to blame electric cars, it is reinventing economies to provide meaningful employment for people in the future.