Depressing As There Is No Good News With The Legacy Auto brands
One month ago I wrote about Volkswagen mulling over the idea of retrenching 100 000 employees and that tune is still the same. The so called 20% shareholder who is the German Government representing the Lower State of Saxony stated they would not let this happen. This week the other major shareholders said they need to do everything to stay competitive against the Chinese threat that they are fighting against right now. This tells you the job cuts are real and will happen.
Volkswagen is not on it's own here with these massive job cuts as all the other German automakers are on the same page. BMW announced two weeks ago they are clearing out 5% which represents 8000 employees by 2027. Mercedes has employee contracts running till 2034 and only those retiring will not have their positions replaced. The question is can the company last till 2034 before cutting staff and surely plants around the globe will be closed down first then. 2034 is far too late and the market will be so different in 8 years time there is no possible way Mercedes can continue with the same size work force.
Knock On Effect
This is not just the automotive car manufacturers being affected by the drop in sales and as one would expect those companies supplying various parts are also feeling the heat. Bosch the mobility company that provides major auto components like fuel injection and steering is targeting a saving of $2.5 billion after seeing their profits drop by more than 50% last year. The volumes are no longer there like they used to be with all the German auto manufacturer numbers declining rapidly. Turning this around into a profitable business will require another 22000-25000 job loss.
Continental tyres has not avoided the downturn in sales and needs to find $150 million and will be cutting administrative workers first. The other employees are protected by labour deals until 2030, but who says they are safe? ZF which supplies electric power trains is cutting nearly 8000 jobs which is ironic as the Chinese are eroding all the automotive sales through supplying their cheaper electric vehicles. There will be thousands of other companies that are tied into supplying various parts and services to these automotive giants that have not even been factored in which would easily account for another 50 000 - 100 000 job losses.
In total an expected 100 000 jobs is coming form the various suppliers supplying these once automotive giants with their components. The total number of jobs cut will by 2030 if continuing at the same rate see over 300 000 job losses in Germany alone which is catastrophic for the economy and the EU.
The crazy part is BYD the largest Chinese Electric vehicle company also laid off staff losing 10% of it's workforce reducing the numbers down from 970 000 to around 870 000. This was due to staying competitive in China and this has already happened whilst the Germans are still disusing what they need to do. Bureaucracy and idiotic thinking has got them to this point with no common sense and anyone with a brain would have forecast these results.
The utter madness is the likes of Mercedes, BMW and VW have joint ventures teaming up with Chinese automotive companies. This is literally allowing the enemy into your camp and no wonder why we are seeing so many similar looking cars that are almost identical today.
The German government along with the EU has not protected their own work forces because surely the 300 000 jobs in danger are worth protecting at all costs. Huge tariff increases on any Chinese vehicle should have been the order of the day blocking any Chinese vehicle sale in the EU.
Sticking to the automotive theme do you remember when I wrote about Goodyear shutting down their plant in South Africa? The SA Government ploy was so obvious as they forced them out by allowing cheap Chinese tyres to flood the SA market. The Sailun Group a Chinese tyre manufacturer is now negotiating a tyre factory replacing Goodyear so this was always the plan and whoever made it happen will be financially rewarded.
Posted Using INLEO
