General Motors CEO Mary Barra. Auto expert warns of “generational layoff” in car industry. Silicon Valley is taking a lesson from Detroit this time. The shift to electric vehicles will lead to more layoffs in the coming years. After avoiding massive job cuts in the tech sector earlier this year, car companies are starting to rationalize their own staffing with buyout packages and waves of layoffs. But the downsizing wave affecting the automotive industry is not like that of tech giants like Google, Meta and Microsoft. Tech executives blame over-hiring, bogus work and other excesses of the last decade’s economic boom for the need to thin their ranks. The automotive industry, on the other hand, is undergoing a decades-long transition to electric vehicles that will wipe out some jobs while at the same time creating jobs that didn’t exist a few years ago. General Motors last week announced a sweeping buyout program that will cover most of its salaried workforce in an effort to “accelerate attrition” and save $2 billion in the transition to electric vehicles. GM’s buyout packages come after months of smaller layoff announcements from rival Ford and Jeep-maker Stellar. Chris McCarthy, global transportation leader at management consulting firm North Highland, calls these waves of decline in the auto industry “generational layoffs” that are different from what’s happening in the tech world now because some of those jobs are being replaced with new ones. . “We’re seeing layoffs in one area and growth in another,” McCarthy said. That’s compared to downsizing in Silicon Valley where AI and other technologies make it easier to do more with fewer people, he said. “The auto industry is still in great need of employees with skills in software programming and engineering.” That will be a difficult equation to balance in the coming years, Martin French, managing director of consultancy Beryls, told Insider. “If you look at the tens of billions earmarked for electrification and compare that to what these companies have actually been doing over the last few years, it doesn’t add up,” French said. “I think this is just the first wave.” Silicon Valley has learned from the Detroit layoffs and buyouts are nothing new to the automotive industry, especially in the past few years. After the 2009 economic collapse, car companies began restructuring their staffs in good economic times, cutting thousands of jobs in the boom years leading up to the pandemic. In French’s view, the tech industry is taking a page from Detroit’s playbook as it trims its ranks this year. He is skeptical of claims that tech companies are already vulnerable to the economic downturn, and instead believes that these companies are preparing for the worst before a true “bloodbath.” “Is it really an economic downturn? Or is it that companies are just saying, you know, it’s time to be a little smarter and leaner?” French said. “Tech companies are taking a lead from what automotive companies have done in the past and trying to deal with the recession before it really hits.” GM underwent a global restructuring in 2019 that streamlined thousands of jobs and closed factories across the country. Ford also cut 7,000 jobs that same year as part of a shift to electrification. Both companies said at the time that they were taking advantage of good economic times to cut staffing based on strategy.
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