Study Fraunhofer IAO The Effects of Electromobility on Employment in the German Automotive Sector
According to the study "ELAB" by Fraunhofer IAO, electrification of powertrains is set to significantly reduce personnel requirements, with suppliers expected to take the hardest hit. Do these results also apply to the German die casting industry and light metal casters?
As a megatrend, electromobility is changing the entire automotive industry, including suppliers: After all, by 2030 almost 30 % of newly registered cars in Germany will be electric vehicles. This corresponds to annual sales of around 900,000 cars. A total of around 6 million electric cars will then drive on German roads. The production volume for combustion engines will decline from 3.2 million vehicles (2016) to just 2.4 million. In the medium term, the electrification of the powertrain will have drastic effects on employees in the automotive industry.
Electromobility Could Cost 75,000 Jobs in the Supplier Industry
By 2030, electromobility could directly or indirectly impact every second job in the drive technology sector for cars. This is the conclusion of the "Effects of vehicle electrification on employment in Germany (ELAB)" study conducted by the Fraunhofer Institute for Industrial Engineering (IAO). According to the findings, electrification and productivity – assuming the most likely developments – will result in the loss of around 75,000 jobs in Germany’s drive technology sector. This figure factors in the creation of some 25,000 new jobs for components such as batteries and power electronics. Germany’s automotive industry currently employs around 840,000 people, including around 210,000 who work in drive train production.
Considering the total number of people employed in Germany exceeds 44 million, the potential loss of jobs is comparatively low, explained Professor Oliver Riedel, institute director at Fraunhofer IAO. “But on a plant and regional basis, the effects can be serious. Think about smaller businesses, for example, that are unable to make up for lost sales of components for internal combustion engines, or structurally weak regions where alternative employment is scarce,” he said.
Study Investigates Impact of Electromobility on Employment in Three Scenarios
In the study – initiated by IG Metall, BMW, Volkswagen, Daimler, Robert Bosch, ZF Friedrichshafen, Schaeffler, Mahle International and the German Association of the Automotive Industry – researchers from Fraunhofer IAO examined the effects of electromobility on employment in three scenarios. The focus is on a scenario in which by 2030 a quarter of all vehicles are powered by all-electric motors, 15 percent of vehicles are plug-in hybrids and 60 percent have a higher efficiency gasoline or diesel engine. Plug-in hybrids are particularly significant. Owing to the fact that they combine conventional and electric engine types, their impact is positive both in terms of climate and of employment. All scenarios are based on the assumption that the components for hybrid and all-electric vehicles are largely produced in Germany.
The study draws on production data from the participating companies. Given that the share of employment analyzed at these companies accounts for more than half of the drive technology value chains in Germany, the results are highly valid.
The Consequences for Light Metal Foundries and Die Casters
The majority of Germany’s die casting foundries enjoyed growth in revenue and production in 2016 and 2017, and are confident that they can continue this trend in 2018. In the first three quarters of 2017, growth rates were disproportionately high, especially for cast zinc and cast magnesium (source: Federation of the German Foundry Industry, BDG):
- Die-cast aluminium +1.2% (to 494,000 t)
- Die-cast magnesium + 4.5% (to 13,800 t)
- Die-cast zinc +11.6% (to 47,700 t)
The data in Fig. 2 show that the number of employees in the entire foundry industry has declined in recent years: while the iron casting, steel casting and non-ferrous casting segments continued to reduce their staff, light metal casters recorded growth of approximately 5.5 percent between 2016 and 2017.
Despite the growth rates, the near future also holds risks for those die casters whose customers are primarily OEMs or Tier 1 suppliers. Jost Gärtner, managing partner of the market specialist AluMag Automotive, points out, that the market situation could change drastically: "But should the battery electric vehicles (BEV) share rise considerable faster than that of the plug-in-hybrid electric vehicles (PHEV) and full hybrid vehicles (HEV) combined, an overcapacity could hit the aluminium foundries by the end of the next decade" (Read here his expert article: Overcapacity of or Opportunity for Cast Aluminium?) If these overcapacities should indeed occur in the aluminium foundries, which make up the largest part of light metal foundries, this development would really lead to job losses.