Labor Pains Powering Electromobility With Workers' Rights

Electric cars stand to shake up the auto industry and make thousands of jobs obsolete. But co-determination can soften the blow.
A Tesla factory operated using Kuka robots.

The numbers alone are massive. If the electric car comes, in Bavaria alone, as many as 90,000 jobs would be affected, estimates Jürgen Wechsler, an official of Germany's metal workers' union IG-Metall. German automaker Daimler’s top employee representative, Michael Brecht, is afraid that only one in seven jobs in engine and transmission production will be left. And Audi is looking worriedly at its parent brand VW in Wolfsburg, which have cut 30,000 jobs as a first step. Germany’s largest branch of industry is making itself fit for the future – one that will have a lot to do with digitization and less to do with diesel.

The alarm signals coming from officials are meant to jolt their own clientele. Apart from Volkswagen, the German car industry considers itself to be deep in the comfort zone. Earnings, bonuses and profit-sharing also flowed in 2016 - but only for yesterday’s achievements. Unions and works councils, on the other hand, are worried about what they are in for. In the past months, the German car industry has very publicly signaled a change of course.

Audi, BMW, Daimler and Porsche are outdoing themselves in announcements of a new electric offensive. Workers are already crunching the numbers to find out what that means at their own future. The work-intensive production of complex combustion mechanics – essentially the heart of German production sites today – is gradually becoming obsolete. Investments are flowing into electric cars.

Workers have more to lose in this change than management.

The change is problematic for unionized workers, who have a say in the decisions made by supervisory boards about their future. They must agree to their own amputation with the phasing out of combustion engines. It is a particularly painful process, as workers have been profiting for years from the automotive industry’s export boom.

The trend toward ever larger vehicle bodies and stronger engines ensured both jobs and influence. Martin Winterkorn and Ferdinand Piëch were workers' heroes because they guaranteed jobs and codetermination – that is, despite their authoritarian style and refusal to understand that upheaval was imminent.

But those days are over. Workers are now even calling for a more rapid changeover to electric vehicles. They are aware of numbers that were long played down on management boards. Month after month, Audi, BMW, and Daimler are losing market share to the electric pioneer Tesla, which is already number one in the premium segment in California and Switzerland. Diesel and the combustion engine are threatened with potential bans in more and more cities. Workers have more to lose in this change than management. Managers and investors come and go. But ultimately, it is the employees who will pay the greatest price if the industry doesn’t manage the jump.

Electromobility is only part of the change facing workers in the auto industry. Digitization has taken hold of every workflow – from development and production to marketing. The 35-hour week and culture of being physically present is disappearing. Flexible working hours are increasingly gaining traction.

Once it was a matter of optimizing crankshafts and combustion chambers in well-defined sequences; a matter of sending a new model onto the street every seven years. Today, software experts develop virtual cockpits for updates within seconds. Alongside classic engineers are young creatives, to which the standards of the metal industry’s collective wage agreements apply to less and less.

These are the acid tests of co-determination.

“Fast breeders” is what Audi boss Rupert Stadler calls spin-offs and joint ventures with suppliers. Automakers evade the classic co-determination with minority shareholding. Currently, BMW is also flirting with the idea of establishing its new center for autonomous driving outside the collective wage agreement. For IG Metall, these are the acid tests for co-determination.

It does not have to be this way. A pragmatic understanding of co-determination is the strength of the German car industry.  This became clear during the industry’s last upheaval, globalization. In contrast to the U.S. for example, where radical union representatives ensured that large parts of production were shifted to Mexico, IG Metall in Germany showed itself to be highly flexible. Expansion abroad was agreed to, while at the same time investments were made at home and further training was provided. This was the deal, and it is also the reason why the world today prefers to drive a Mercedes over a Chevrolet.

Electromobility and digitization are a greater challenge than globalization. Future upheaval will have IG Metall walking a fine line. If they are not amenable to change, they threaten the flexibility companies will need. If they agree to all the demands of “change management”, they might find themselves in an atomized world of employment where collective influence on company decisions becomes a thing of the past – like the diesel engine.

 

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