This summary report on the future of work in the automotive sector focuses on the major changes facing the sector. These include: the rise of emerging economies, new mobilities, the “greening” of the product, and the digitalization of production. This is in order to identify the main challenges for employment and industrial relations and to assess the institutional and organizational solutions adopted by the various stakeholders to confront these developments. The aim is twofold – i) to develop robust scenarios on the basis of current trends; ii) to identify levers of action for embarking upon alternative paths – whenever desirable and feasible – to help create jobs, improve their quality and foster social dialogue.
Two major approaches were adopted to conduct this research agenda:
– an analysis of the structuring/restructuring processes at work in the major regional
and national automotive plants (I);
– an analysis of the strategies and productive models adopted by the major
automotive companies in the light of these developments (II).
The analyses carried out by region (Europe and North America) and by country (China, India, Mexico, CEEs – in particular Poland and Romania, the EU 15 – in particular France, Germany, Italy, Spain and the United Kingdom – and the United States), which were developed in the summary report’s first area of research, revealed that the processes of structuring new industries in the emerging countries and the restructuring processes in mature countries are, to a large extent, over-determined by global and “globalizing” trends. These are associated with the extension of free-trade zones, the pivotal role of FDI in the dual process of structuring and restructuring that is in play in these countries, and the integration of these industries in global value chains. This goes hand in hand with the extension and standardization of global production platforms. Such an evolution, which is also accompanied by a strong “financialization” of the sector (Favereau, 2016), reinforces the domination of multinational enterprises – OEMs and first-tier suppliers – on national automotive markets and industries. As a result, the capacity of these companies to shape national employment relations to suit their interests is also reinforced. In most of the countries studied, this situation also results in an increasing lack of solidarity between the former “national champions” and their domestic bases, especially in the United States and Western Europe. In these countries, restructuring processes have taken on an unprecedented scale and significance, during the period under review.
Given that these processes are accompanied by increased competition in each of these markets, they inevitably tend to lead to deteriorating employment and working conditions. The underling trends are towards greater job insecurity and increased labour flexibility, with constant or declining wages. These trends were apparent in all the countries reviewed, with the exception of Germany. But this development was far from being homogenous. In the emerging countries, the extension of global platforms prompted multinationals to opt for solutions that were closer to the High Road approach for their higher capital-intensive production sites. This was in order to establish, by means of ad hoc wage policies, a strong core of skilled workers (Jürgens and Krzywdzinski, 2016). However, the workers concerned by these positive developments usually only account for a minority of the employment in the sector. Moreover, at least in the case of Mexico and India, even these permanent workers are being affected by deteriorating employment and working conditions as regional integration continues to strengthen.
In the industrialized countries, particularly in North America and Europe, restructuring processes do not tend to undermine the job quality of the permanent workers employed, but the numbers of workers in this category are falling fast. The new recruits who replaced permanent workers during and after the 2008-09 crisis experienced a marked deterioration in their working and employment conditions. In addition, the introduction of new fixed-term contracts and two-tier pay system, resulted in wage cuts ranging from 20 to 50 per cent, and much more flexible work.
The major paradox of all this is that the anti-Fordism underlying these developments, and embraced by the main automotive companies, is admittedly a response, albeit in the short term, to the competitive constraints to which OEMs are subjected. But, it will have an adverse effect on the development of the automotive industry in the long term. It focuses on winning over the market of a minority of wealthy households, consisting of an older clientele that is highly solicited by other offers of transport and leisure – resulting in fiercer competition and spiralling costs (Jullien and Pardi, 2014). For the same reasons, this approach forces the sector to adopt an all-out strategy to cut costs. This limits its potential for innovation and its ability, inter alia, to take on the challenge of developing new affordable carbon-free vehicles. Finally, it causes a decline in employment and working conditions, which bring dissatisfaction, disputes and turnover in their wake, while the growing sophistication and complexity of production increasingly requires the stronger voluntary involvement of a skilled and experienced workforce.
Taken as a whole, the contradictions and limitations inherent in the scenarios that sustain globalizing tendencies allowed us to envisage alternative scenarios that would move towards a deglobalization of the automotive industry and a renewal of the Fordist dynamics that traditionally shaped it. In the report’s first area of research, we identified a number of preconditions for creating these scenarios. Ideally, this should make it possible to reconcile the companies’ sales growth and world profits, with the prosperity of peoples and countries.
The main alternative scenario we identified hinges upon increasing political and regulatory constraints to force manufacturers to come up with new dedicated product policies for the emerging countries. A case in point is India, where the market is structured around fiscal policies that encourage the purchase of cars of less than four metres, affordable for the middle classes. These new “low cost” designs represent a downscaling of the product and are characteristic of “reverse” innovation (Midler, Jullien and Lung, 2017; Radjou, Prabhu and Ahuja, 2012). This responds in a frugal manner to the challenges, inter alia, of pollution, urban congestion and car ownership in rural areas. Making these vehicles available to the middle classes constitutes a vector of democratization and sustainable market growth, encouraging national governments and enterprises to promote more expansionary wage policies. These should enable permanent workers in industry and the services sector to own a car during their career in accordance with the Fordist doctrine during the “golden years” after the Second World War. Thereby, this would provide a macroeconomic foundation to the attempts to improve sectoral and local employment and working conditions. This would also consolidate the power of wage earners and trade unions in their relationship with the multinational enterprises, which would prompt the growth of new forms of collective bargaining at branch level. In the longer term, this trend is likely to give rise to a sectoral-based regulation of employment and working conditions, either as a result of disputes or coordination. This would curb polarization and job segmentation. From the manufacturers’ standpoint, these developments would give a boost to those who have already embarked upon decentralized multi-domestic strategies, and provide the possibility for these strategies to become a model, which is likely to transform the governance and organization of enterprises in the sector.
In mature countries, we envisaged a variant of this alternative scenario. This could be prompted by the fact that there is a growing gap between the global and standardized car model that is being developed to target richer and older households, and the growing specific mobility needs of more modest households in urban, suburban and rural environments (Jullien and Pardi, 2011; Jullien and Rivollet, 2016). The present situation is characterized by a price increase in over-equipped models, which we have learned (after the scandal of rigged cars at Volkswagen) are not even compliant with ecological standards. They are also more cumbersome, heavy and powerful. This state of affairs prevents the development of models that would be more in line with people’s needs and aspirations for new forms of transport. Today, in order to satisfy their mobility needs, working-class and middle-class households are forced into buying increasingly older second-hand cars, entailing high user costs (petrol consumption, insurance, maintenance and repairs) (Demoli, 2015; Julien and Pardi, 2014). Politicizing this issue might lead to a shift from the present sectoral policy concerned with greening the supply of new cars – which we have clearly shown is ineffective – towards a policy of greening the car fleet as a whole. This would be much more ambitious, both from an ecological standpoint (reduction of CO2 emissions and fine particulates) and from a social standpoint (larger and faster diffusion of clean affordable cars with low user costs). A policy of this nature would be perfectly in line with the rise in new car services such as car sharing and carpooling. It would also have a positive impact on employment and working conditions since it would give a boost to production by creating new markets and broadening its national and local integration.
This policy’s impact would be even more positive if it were applied in neighbouring low-cost countries. In the case of the CEEs, this would be a natural outcome, given the structuring role of the European Commission in regulating pollutant emissions and transport within the Single Market. In Mexico, this would be more contingent upon civil society’s aspirations and ability to mobilize, and upon the political elites (Covarrubias, 2015). In any event, placing the greening of the automobile fleet on the agenda – and more generally providing access to a green and modern form of transport – would allow domestic markets to take off, thus reducing these countries’ dependency on FDI and the role of relocations in their own growth patterns.
There are many conditions that might allow the fulfilment of these scenarios. They might arise in part because of the above-mentioned crisis and weakening in the “globalizing” dynamics that currently prevail. They may also come about because of the spread of new aspirations, especially among the social groups and generations hitherto excluded from the present model of new car ownership. They might also arise with the establishment of large alliances that are focused on the issues of green transport and cheaper access to automobiles for working-class and middle-class households and of the quality of products and jobs in the sector. These alliances could include workers, trade unions, consumers, NGOs, and other stakeholders both in countries concerned by the deindustrialization of the automotive industry and those still excluded from access to green and safe cars.
Viewed in this light, the deglobalization that we are proposing does not imply any improbable return to forms of economic protectionism or nationalism. It would, quite simply, encourage more efficient market configurations that would respond to the societal challenges existing today. These include: ecological transition, the availability of green transport for the middle and lower classes, the maintaining and creation of quality jobs, and the improvement in working conditions. In other words, it would set out to ensure that markets would become (once again) drivers of progressive change in their capacity as political and social institutions. It would also lend support, alongside these developments, to those asserting their rights to better employment and work in the automotive sector. This would push manufacturers themselves, and the industrial ecosystems they promote, to become (once more) the agents of social progress.
Chosen excerpts by Job Market Monitor. Read the whole story at The future of work in the automotive sector: the challenges of deglobalization