Job cuts: Auto industry faces further reductions

Why job cuts in the auto industry could be larger

The German Association of the Automotive Industry (VDA) expects additional significant job cuts in the auto industry. As VDA president Hildegard Müller told Redaktionsnetzwerk Deutschland (RND), current calculations now assume significantly higher employment losses than previously expected.

"Unfortunately, based on current calculations we have to assume a loss of 225,000 jobs by 2035, around 35,000 more jobs than previously assumed," Müller told RND.

According to the VDA, a reduction of 190,000 jobs had originally been forecast for the period from 2019 to 2035. Now the assessment is noticeably more negative. From 2019 to 2025, 100,000 jobs have already been lost, according to Müller.

Suppliers are under particular pressure

According to the VDA’s assessment, supplier companies are particularly affected. The shift from combustion engines to electric mobility is changing value chains, production structures, and employment profiles in the auto industry.

“Those particularly affected are the supplier companies, because on the path from combustion engines to electric mobility, many jobs in the supplier industry in particular will be lost,” explained the VDA head.

This brings a central part of the industrial base into focus. Suppliers in particular are closely linked with production, mechanical engineering, component manufacturing, and development. The expected decline in employment therefore affects not only vehicle manufacturers, but also numerous companies along the industrial supply chain.

What role does the location crisis play in job cuts?

As a cause of this negative development, Müller does not refer solely to technological change. She also cites “a serious and persistent location crisis” in Germany and Europe.

“And the conditions are steadily deteriorating. High taxes and levies, expensive energy, high labor costs, excessive bureaucracy – the list of challenges could go on,” she said.

From the VDA’s perspective, several burdens are coming together: transformation, cost pressures, and difficult conditions for industrial production. The result is a significantly more pessimistic employment forecast for the automotive industry through 2035.

Mechanical engineering also views the situation critically

The concerns about Germany as an industrial location are not limited to the auto industry. Clear warning signs are also coming from the mechanical engineering sector. Earlier, Nicola Leibinger-Kammüller, head of the mechanical engineering company Trumpf, painted a bleak picture of the German economy in an interview with "Handelsblatt".

"Since the end of the war, the economic situation in Germany has never been so dramatic. Corona was nothing compared to this," she told "Handelsblatt."

At an internal in-house trade fair at Trumpf, she said she had never seen so many frustrated entrepreneurs in one place. Many small and medium-sized companies are suffocating under bureaucracy and are reaching the limits of what they can do.

"We are losing our industrial base," warned the head of the laser specialist.

What the job cuts mean for industry

The job cuts expected by the VDA show how much the auto industry is under pressure from transformation and location factors. The projected 225,000 jobs lost by 2035 mark a deterioration compared with earlier calculations.

The development is particularly relevant for the supplier industry. There, the shift from combustion engines to electric mobility coincides with difficult economic conditions. As statements from the VDA indicate, high costs, bureaucracy, and locational disadvantages are further exacerbating the situation.

The warnings from the automotive and mechanical engineering industries point to a broader strain on industrial value creation in Germany. At the center is the question of how competitive Germany will remain as a location for production, suppliers, and mechanical engineering.

With material from dpa