This article was originally published by Tyler Durden at ZeroHedge.
Automakers can’t help but acknowledge the global recession in their industry after a decade of growth. As a result, they are slashing payroll across the board, according to Bloomberg. Countries like China, the United Kingdom, Germany, Canada, and the United States have all seen at least 38,000 job cuts over the last six months in the automotive sector. And this could just be the beginning of larger cuts to come.
Daimler CEO Dieter Zetsche said Wednesday that “sweeping cost reductions” are ahead to prepare for what he is calling “unprecedented” industry disruption.
Bank of America Merrill Lynch analyst John Murphy said: “The industry is right now staring down the barrel of what we think is going to be a significant downturn. The pace of decline in China is a real surprise.”
Automakers are cutting shifts and closing factories across the world but the cost-cutting goes beyond that. Salaried workers are also being cut, a surefire sign that slowing sales in both China and the US are taking their toll. Additionally, the slow down is coming at a time when automakers have deployed significant capital to invest in electric vehicles.
We reported about Ford’s plans on Monday to cut another 7000 jobs, representing 10% of its workforce worldwide. And the recession, which was likely due to happen regardless of market conditions, comes at the worst possible time. It could be exacerbated by the ongoing trade war, which foreign carmakers have warned could put 700,000 American jobs at risk.
This chart shows all of the job reductions announced and reported over the last six months.
Morgan Stanley analyst Adam Jonas said Tuesday: “Auto companies globally are contemplating life where global production has greater downside risk than upside. The chopping may not be over for Ford,” he continued, estimating a 5% decline in revenue could result in 23,000 more layoffs in the future.
Meanwhile, global light vehicle sales were down 0.5% in 2018 to 94.8 million, which was the first annual drop in global sales since 2009. Zetsche concluded: “Everything is under scrutiny.”