Will Automotive Restructuring Impact Metrology Equipment Sector?

Daimler has announced it has agreed key points with its General Works Council in order to streamline the Group structure to increase efficiency and flexibility. Measures to reduce costs and employment have jointly been agreed upon. Daimler will use natural fluctuation to reduce jobs and in addition, the possibilities for part-time retirement will be expanded and a severance program will be offered in Germany in order to reduce jobs in administration.

Daimler aims to cut thousands of jobs worldwide by the end of 2022. The agreed job protection in Germany until the end of 2029, which was promised and agreed upon in the spin-off of Mercedes-Benz Cars & Vans and Daimler Trucks & Buses, stays untouched for Daimler AG, Mercedes-Benz AG and Daimler Truck AG. Newspaper reports are indicating some 10,000 jobs could be lost in total at world-wide operations.

The automotive industry is in the middle of its biggest transformation in its history. The development towards CO2-neutral mobility requires large investments, which is why Daimler announced in the middle of November that it would launch a program to increase competitiveness, innovation and investment strength. Part of this program is to reduce staff costs by around € 1.4 billion by the end of 2022 and to reduce the number of management positions worldwide by ten percent.

Daimler’s move is the latest indication of the huge disruption facing the German auto industry as it transitions away from internal combustion engines towards electric vehicles. Profitable diesel sales have also slumped after the emissions cheating scandals and the halt in China sales growth. Electric cars are crucial to meeting the 2020 EU regulations that are set to impose large fines on auto companies who do not reduce average carbon dioxide emissions below set levels.

Electric vehicles have much fewer parts that their comparable internal combustion engine equivalents. With each part going through extensive metrology and performance testing its only natural to assume that the metrology equipment sector will be supplying plenty of new equipment associated with new quality and process control procedures but also over the longer period much less equipment will be required. In addition current auto suppliers, focused on specific traditional automotive power-train components, will experience a much reduced product demand.

While an electric car consists of some 200 major parts, there are more than 1,000 in gasoline or diesel vehicles. The reality is that fewer engineers and supervisors will be needed on the floor. The German Automobile Association and Ifo Institute estimate that more than 600,000 of Germany’s 800,000 auto industry jobs would be directly or indirectly threatened by the end of combustion engines. Toyota’s website states a single car has about 30,000 parts, counting every part down to the smallest screws.

A growing body of research claims this is just a part of the bigger picture. A lot of jobs will become obsolete with the expansion of electromobility, but what about jobs that will be reciprocally generated? Some of the latest studies peg electromobility as removing industrial positions and replacing them with new ones in itstead.

“The electric car will be more than just its drive system,” said Willi Diez, head of the Nürtingen Institute for the Automotive Industry. “I don’t think the horror scenarios are realistic. The entire value chain will not be eroded.”

Whatever; ‘interesting times’ lay ahead for the metrology equipment sector since the automotive sector has long been its largest customer in past decades.

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