The New Economics of Car Production
Engineers working at some of American car maker Ford’s facilities in Europe might be questioning the often heard notion that jobs in the STEM field are usually a good bet. Ford recently announced that as it shifts away combustion engines and moves toward a lineup comprised of electric vehicles, it will no longer need as many engineers. Indeed, according to the general manager of Ford’s Model e in Europe, the company is rethinking its organizational structure, its talent, and the skill set it needs going forward. Like other automakers, Ford is responding to regulatory and social pressure to move toward a more environmentally friendly product.
A key goal for Ford in the move is to concentrate engineering know how in the United States and eliminate excess cost elsewhere. With fewer moving parts in e-vehicles as compared to gas-powered, the need for the current number of engineers has fallen. In fact, the majority of the planned job cuts are related to internal combustion operations and the people who used to be responsible for parts that are not in electric vehicles. Ford’s move comes as competition heats up in the global electric vehicle market. It’s likely that strong competition from Chinese electric vehicle makers could make achieving higher levels of efficiency in production even more important.
Discussion Questions:
- How will technological advances and policy decisions related to protecting the environment change the composition of the workforce in the future?
- One key difference between electric vehicles as compared to those that are gas powered is the substantially smaller number of moving parts in the e-vehicle. Consider the implications of this for the auto industry, for the local economies where parts factories are located, and for supporting industries.
- It’s likely that other automakers will follow Ford’s lead and rethink their current workforce. What other industries could see significant change as a result of policies designed to protect against global warming? Discuss the economic implications of those changes.
Sources| Reuters: https://www.reuters.com/business/autos-transportation/ford-eliminate-3800-engineering-administration-jobs-europe-2023-02-14/; CNBC: https://www.cnbc.com/2023/02/14/ford-to-eliminate-3800-engineering-administration-jobs-in-europe.html; The Guardian: https://www.theguardian.com/business/2023/feb/14/ford-jobs-losses-cut-uk-europe; WSJ: https://www.wsj.com/video/series/in-depth-features/teslas-growing-competition-in-china-goes-beyond-just-evs/580ED23C-D009-4BC3-8891-8099746B6378; Unsplash: https://unsplash.com/photos/aYabcubr7GE