Automakers’ job cuts at 38,000, higher tariffs could lead to more
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 officer, Dieter Zetsche, on Wednesday warned sweeping cost reductions are ahead to prepare for unprecedented industry upheaval.
“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 Tuesday, 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 Monday it will eliminate 7,000 jobs, or 10 per cent of its white-collar workforce worldwide.
The downturn could be exacerbated by higher tariffs threatened by the U.S., which a trade group representing a dozen of the largest domestic and foreign carmakers warned could put 700,000 American jobs at risk.
Toyota Motor Corp. and the Japanese car industry condemned the possible levies in strongly worded statements .
“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 per cent decline in revenue will require another 23,000 reduction in salaried jobs, assuming no other costs are pared back.
Global light vehicle sales fell 0.5 per cent 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 per cent drop this year, but a faster-thanexpected deceleration in the Chinese market may have a more negative impact on sales.