Structural change in the automotive industry – dealing with the social consequences

Technological change leading to a new paradigm Electrification Automated and connected cars Digitalisation of production Mobility services

Impact on the value chain Borders between automotive sector and IT sector have started to blur Information technology will penetrate all stages of the supply chain Data as new raw material Mechanical skills replaced by digital skills In a later stage also merger between automotive industry and energy industry/transport services New entrants: mobility providers, energy companies, battery producers, IT- companies Not all companies can afford the huge investments in R&D for alternative powertrains (as it is still not clear when the economic return will happen) All this can lead to a desintegration of the automotive value chain

Electronic components have increased from 20% in 2004 to 40% in 2015 in conventional cars, in Evs they repreesent 75% Value added will shift to digital services: mobility services, navigation, entertainment, social media, connections with other cars/road infrastructure Digital platforms for e-commerce, autonomous driving, automated production systems, connected vehicles, navigation and car sharing are expected to capture 30 tot 40% of automotive value chains over time New market for smart transportation systems: new toll systems, new traffic control systems, Shift of value added from OEM’s to other parts of the supply chain End of diesel? Impact of environmental regulation/mobility services on sales figures

Shifts in value added mean shifts in employment Impact of digitalisation: less routine jobs, more IT specialists Electric power train contains 200 components, a conventional powertrain: 1200 No exhaust system, oil pump, fuel pump, water pump, starter, catalysts, transmission 1 employee can produce 212 internal combustion engines per year or 1500 electric engines Electric cars are easier to maintain: Electric cars have almost no moving parts Electric motor has only one moving part: the shaft which is pretty reliable and requires no maintenance No replacement of components as water pump, alternator; no change of oil Automated cars can’t crash: no need for body repair shops anymore Shift of jobs and value added from OEM’s to specialised suppliers No need for showrooms because of internet driven sales process Impact self-driving cars on sector of transport services

Alternative job opportunities Energy infrastructure: increased demand for electricity, smart grids Energy efficiency Charging infrastructure Smart roads New digital jobs all along the supply chain Mobility services (but need to regulate the sharing economy) Components for connected/automated cars: sensors, lidars, radar, complex data processing Developing the circular economy around cars? New materials, battery-technology More jobs in R&D and engineering Challenge new jobs: Are created somewhere else At another moment And require other skillsets than the jobs that will disappear Most of the people made redundant will probably have to accept a job of lower quality: precarious jobs in services (cleaning, logistics, hospitality,...)

Dealing with structural change in a socially responsible way Make disruptive change socially progressive, avoid mass redundancies and the decline of automotive regions, find a solution for each worker affected A middle class of industrial workers created by the second industrial revolution is disappearing, challenge will be to create new quality jobs for this group Make the S-curve for uptake of new products more linear in order to reduce the social costs of transitions: not only planning security for industry, also for working class families Industrial policy that has the ambition to Remain present in the current value chain as long as possible/needed Builds the new value chains for alternative powertrains Maintain the strong European export position (based on upmarket conventional cars) Promote industrial collaboration, strategic alliances as a way to share costs of R&D and investments To enter new value chains Support to automotive SMEs in Redefining their value chain positioning Redirect their core competencies to other fields of business (in or out the automotive industry Create new job opportunities in the circular economy connected to the automotive supply chain (recycling, re-manufacuring, re-use)

Organize a smooth transition from one job to another Ensure employability of the workforce: LLL, recognition of informal competences, organization of the transferability of skills, e-Learning Promotion of internal mobility: upskilling the existing workforce to the jobs of the future in the automotive industry Organize a smooth transition from one job to another outplacement, employment cells, tailor-made training programmes, job search assistance While maintaining a labour contract/income Establish a culture of social dialogue at all levels (company, sector, regional, national) as a key element for timely anticipating change and to avoid social disputes Respect for regulations on collective redundancies and information and consultation Exchange of good practices regarding anticipating and managing change

Extending scope of the Globalisation Adjustment Fund Making the most of the ESIFs to support the employability of the workforce and to re-train those whose job is at risk Extending scope of the Globalisation Adjustment Fund to restructuring resulting from the decarbonisation of non-ETS sectors Include regional reconversion programmes Increase level of support: income support during retraining, technical assistance, amount of the financial contribution of the EGF (60%) ! For the ETS sectors: Innovation Fund, Modernisation Fund and Just Transition Fund (proposed by the EP)

Regional conversion strategies Regional task forces composed of all stakeholders to develop strategies for the future Deployment of smart specialisation strategies Making re-training and re-employment a shared responsibility of all: companies, social partners, regional development agencies, public employment services, authorities Promotion of entrepreneurship, start-ups