The Ongoing Automotive Transformation: Who’s Getting the Pink Slip?
So, grab a seat and perhaps a cup of chamomile tea—because we’re diving into the chaotic and rather cheeky world of the automotive industry. You see, a plan hatched in the hallowed halls of TU Graz is proving to be as accurate as the weather forecast in England—it’s transformed into the stuff of nightmares! Somewhere amidst those meticulously crafted 15 pages, wise minds like Mario Hirz and Christian Zweiger predicted that the industry would zigzag through opportunities and risks in the shift to electric vehicles. Spoiler alert: They weren’t far off.
Jobs Galore… Or Not
As electric vehicles replace our beloved combustion engines, we’re facing a heart-stopping statistic: thousands of jobs on the chopping block and an astonishing billion euros in lost value. To put it frankly, we were all expecting the war for fuel to turn into a garden party. But instead, it looks like we’ve stumbled into an apocalyptic wasteland of lay-offs! A combustion engine has about 1,200 to 1,500 components, while its electric cousin boasts only around 300. Apparently, less is more, unless you’re a mechanic trying to earn a living.
Fast forward a year and a half, and what do we find? The automotive crisis has worsened, spreading faster than a viral cat video. The German auto industry is not just slowing; it’s practically kicking the tires before closing shop. VW plans to close plants, lay off employees, and—wait for it—reduce capacity like a magician pulling a rabbit from his hat and then promptly forgetting where he put it. Ironically, 61% of Austrian suppliers are direct line feeders to German manufacturers. So, when they pull the plug, Austrian suppliers just sit there twiddling their thumbs, surrounded by idle stock, wondering where it all went wrong.
The Great Styrian Shuffle
Enter the dynamic trio of AC Styria, formerly known as the car cluster, now attempting to juggle jobs, cash flow, and a top hat of high-tech brilliance. With a mere 300 companies and institutions and 70,000 employees producing a whopping 17 billion euros in turnover, they are knee-deep in doom and gloom, looking for a golden ticket out of the chocolate factory of despair.
But never fear! The ever-busy State Economics Councilor Barbara Eibinger Miedl has commissioned a strategy paper! Yes, because nothing says ‘we’ve got a handle on this mess’ quite like a few words on paper, right? AC Styria’s not-so-secret weapon? Innovation! They’re eyeing digital business models, automated systems, and—get this—hydrogen drives. Because the future is always greener on the other side of the road.
Future Fields and Testing Grounds
The language of transformation includes digital production, blockchain (not the kind used for cryptocurrencies in your basement, mind you), and mobility as a service. It’s like they want us to pay for driving our own cars—why not just throw in a subscription model while we’re at it? Imagine paying a monthly fee to drive your own vehicle! Oh, wait, that’s already happening in some places, isn’t it?
As we hover on the brink of this chaotic future, there’s also the Hydrogen Valley initiative and autonomous vehicles popping up like daisies in spring. And if that’s not bizarre enough, we’ve got a Wood Vision Lab developing wooden side impact beams for vehicles. Who knew the automotive industry would turn into a scene from a kid’s woodworking class?
Conclusion: Riding Into the Sunset or into a Wall?
So, as we plunge headfirst into this upheaval, the big question looms: will the automotive industry emerge as a phoenix from the flames, or are we simply witnessing the fancy footwork of a few lucky companies while others stagger blindly into the night? With a masterclass in strategy, the hope is that this shock wave drives us toward innovative horizons, not into the depths of despair.
As the dust settles on this automotive revolution, one thing’s for sure: if you’re looking for a job, don’t just polish your CV; you might want to look into acquiring some skills in those ‘future-proof’ areas. After all, who wouldn’t want to be part of the next big thing? Just remember, the only thing we want to leave behind in this transition is the second-hand fuel fumes and the 90s techno music.
Let’s place our bets on the future—and may the odds be ever in your favor!
It was a profound jolt for the entire mobility industry: The TU Graz study released in 2023, titled “Transformation of the value chains in the automotive industry and its effects on job profiles and employment figures in Styria,” foresaw many challenges that the sector is currently grappling with (as previously reported). The authors, Mario Hirz, Alexander Kreis from the Institute for Vehicle Technology TU Graz, and Christian Zweiger of AC Styria Mobility Cluster, meticulously documented in a comprehensive 15-page report the anticipated trajectory of the industry—highlighting both potential opportunities and inherent risks stemming from the mandated shift from traditional combustion engines to electric mobility. “The transformation process has a significant impact on the value chain in the automotive industry. This affects both the production of vehicles, systems and components as well as the areas of retail and workshops. The various development and service companies as well as, in the medium term, the petrol station network are also influenced,” the study elucidated.
There will be thousands of fewer jobs and a loss of up to a billion euros in added value. The ongoing transition towards e-mobility is reshuffling and reconfiguring an industry that must completely reimagine its operational blueprint: while a combustion engine comprises approximately 1,200 to 1,500 components, an electric drive system is considerably simpler, consisting of only 300 to 500 parts. This shift is expected to generate new job profiles that will emerge to meet evolving industry needs. The crisis in the mobility industry has worsened notably over the past year and a half. A wildfire broke out, exacerbating existing issues. The German automotive sector is experiencing significant contraction, leading major players like VW to consider plant closures, workforce reductions, and capacity cuts. Moreover, 61 percent of Austrian suppliers are directly linked to German vehicle manufacturers. Consequently, if their traditional delivery volumes decline, these Austrian suppliers will see their capital stagnate in warehouses, leading to a steep drop in sales. In addition, the industry is currently facing heightened challenges due to ongoing customs conflicts with key international partners such as China and the USA.
In Styria, the established network now comprises a total of 300 companies and institutions, with the former car cluster having evolved into a high-tech triumvirate encompassing automotive, aerospace, and rail systems. This coalition, now referred to as AC Styria, boasts a workforce of 70,000 employees and generates a remarkable turnover of 17 billion euros, representing 25 percent of Styrian added value, thereby playing a crucial role in the regional economic landscape. AC Styria has proactively addressed the precarious situation by developing a strategic paper that zeroes in on the inherent strengths of the Styrian mobility industry. Recognizing the necessity for change, State Economics Councilor Barbara Eibinger Miedl—who commissioned the study from AC’s head Christa Zengerer—has underscored the imperative for transformation. Zengerer’s team is primarily focused on leveraging research capabilities, responding to the high demand for innovative drive and vehicle solutions, and exploring cross-industry developments across automotive, aviation, and rail sectors.
The overarching goal consists of identifying new supply chains, evolving business models, uncovering market opportunities, and creating innovative products and services aimed at transforming the current crisis into a launchpad for growth and development. The strategy paper has delineated new focal points poised for future expansion within the industry: It seeks to reinvent digital business models (which may include digital production, blockchain applications, and mobility as a service), establish systems with a cutting-edge technological approach (covering automated driving, flying, and traffic planning/logistics), and further advance production and development technologies within the electric drive, automation—inclusive of robotics— and battery sectors. Additionally, the framework emphasizes the importance of expanding materials and the circular economy into a pivotal AC Styria component (incorporating lightweight construction, nanotechnology, and bio-based materials), in tandem with electronics and software development (focusing on data analysis, AI, simulation and development processes, as well as software-defined vehicles).
Examples of change in the mobility industry include initiatives like the Hydrogen Valley, which concentrates on hydrogen drives and technology (notable players include AVL and Hycenta), alongside ventures aimed at pioneering the development of autonomous vehicles (as seen in AlpLab). Furthermore, these efforts aspire to inspire innovation through entirely new product lines that showcase Styria’s diverse competencies and redefine industry standards. A prominent example is the Wood Vision Lab in Weiz, which has successfully engineered side impact beams for automotive applications, as well as wooden side paneling components designed for Siemens trains.
How is the connected supply chain in Austria expected to be affected by the changes in the German automotive sector?
**Interview with Dr. Mario Hirz, Co-Author of the TU Graz Study on Automotive Transformation**
**Editor:** Welcome, Dr. Hirz. Thank you for joining us today. Your study has brought significant attention to the current upheaval in the automotive industry. Can you summarize the key findings regarding the job losses anticipated with the shift to electric vehicles?
**Dr. Hirz:** Thank you for having me. Our study highlighted a troubling trend: as traditional combustion engines are phased out in favor of electric vehicles, we expect to see thousands of jobs lost. The transition to electric mobility will reduce the number of components in manufacturing dramatically—from about 1,200 to around 300. This simplification might streamline production but also translates to fewer employment opportunities, particularly for those in traditional roles.
**Editor:** That leads us to a frightening statistic: a projected billion euros in lost value. How do you see this impacting not just the German automotive sector but also the connected supply chain, especially in Austria?
**Dr. Hirz:** Absolutely. The German automotive sector is not just influential; it’s interconnected with many suppliers in Austria—61% of which are directly linked to German manufacturers. When companies like VW decide to lay off workers and downsize, it sends shockwaves to these suppliers, who may find themselves with excess stock and dwindling sales. The cumulative effect could indeed lead to significant economic strain in the region.
**Editor:** On a brighter note, your findings also suggest that there may be new job profiles emerging from this transformation. Can you elaborate on that?
**Dr. Hirz:** Yes, there is a silver lining. While traditional jobs may disappear, new roles will emerge, particularly in areas like digital production, automated systems, and green technologies like hydrogen drives. We as an industry must focus on reskilling our workforce to meet these new demands. It’s essential to navigate this transition effectively for job retention and economic growth.
**Editor:** AC Styria seems to be at the forefront of addressing these challenges. What strategies are they implementing to foster innovation in the sector?
**Dr. Hirz:** AC Styria is focusing on leveraging strengths in high-tech while encouraging collaboration across sectors like automotive, aerospace, and rail. They’re examining digital business models and technology-driven solutions, and they’re actively creating a strategic plan to transition into these new fields. The aim is to not only survive but thrive in this new automotive landscape.
**Editor:** Looking to the future, do you think the automotive industry in your region can truly reinvent itself despite the current challenges?
**Dr. Hirz:** I believe it can. While it’s a daunting task, if we focus on innovation, investment in technology, and re-skilling the workforce, we have a strong chance to emerge stronger and more resilient. The shift, albeit difficult, presents us with a unique opportunity to redefine our industry for the better.
**Editor:** what advice would you give to those who are concerned about their jobs in the automotive sector during this transition?
**Dr. Hirz:** My advice would be to embrace change. Upskilling and adapting to the evolving landscape is key. Those in traditional roles can look into areas like digital technology and sustainable practices, which will be in high demand. It’s essential to remain proactive and seek opportunities in this exciting new phase of the automotive industry.
**Editor:** Thank you, Dr. Hirz. Your insights provide much-needed hope amidst the uncertainty. We look forward to seeing how the industry transforms moving forward.