As global auto sales slow after a decade of growth, carmakers are girding for a deeper downturn by slashing payrolls.
From China to the U.K., Germany, Canada and the U.S., companies have announced at least 38,000 job cuts in the past six months.
It may be just a beginning: Daimler AG’s departing chief executive, Dieter Zetsche, on May 22 warned sweeping cost reductions are ahead to prepare for unprecedented industry upheaval. “Everything is under scrutiny,” the longtime CEO said as a farewell at an annual meeting in Berlin.
“The industry is right now staring down the barrel of what we think is going to be a significant downturn,” Bank of America Merrill Lynch analyst John Murphy said at a forum in Detroit on May 21, adding that the pace of decline in China “is a real surprise.”
Carmakers are cutting shifts or closing factories altogether across the globe, but the culling goes beyond that. Several recent rounds also target salaried workers, reflecting sluggish sales in the world’s two largest auto markets -- China and the U.S. -- and the pivot auto companies are making toward a future of electric and self-driving vehicles. Ford Motor Co. said May 20 that it will eliminate 7,000 jobs, or 10% of its white-collar workforce worldwide.
Global light vehicle sales fell 0.5% in 2018 to 94.8 million, which LMC Automotive said marked the first annual drop in global sales since 2009. Morgan Stanley projected in January another 0.3% drop this year, but a faster-than-expected deceleration in the Chinese market may have a more negative impact on sales.
“Auto companies globally are contemplating life where global production has greater downside risk than upside,” Morgan Stanley analyst Adam Jonas wrote in a report Tuesday. He said the chopping may not be over for Ford, estimating a 5% decline in revenue will require another 23,000 reduction in salaried jobs, assuming no other costs are pared back.
Here’s a rundown of major job reductions announced or reported in the past six months:
-Ford May 20 7,000 Global
-Nissan May 15 4,500 Global
-Honda May 13 3,500 U.K.
-Daimler April 18 10,000 Germany
-Tesla April 8 N/A U.S.
-Fiat March 29 1,500 Canada
-Ford March 15 5,000 Germany, UK
-Ford China JV Feb. 27 N/A China
-Audi Feb. 20 N/A Germany
-Tesla Jan. 18 3,000 U.S
-Nissan Jan. 17 700 U.S.
- Land Rover Jan. 10 4,500 Global
-General Motors Nov. 26 14,000 Global
Note: Some of the Ford job cuts reported in February and March are included in the company’s salaried reductions announced in May.