When Kristin and Thomas Schmitt took out a mortgage and bought a house last summer, the German couple’s dream looked as if it was coming true. Two months later, they learned that the tire factory where both work would be shut down early next year.
A malaise in Germany’s mighty automobile industry, caused by weaker demand from abroad, stricter emission rules and electrification, is starting to leave a wider mark on Europe’s largest economy by pushing up unemployment, eroding job security and hitting pay.
“It’s a nightmare. This is pulling the rug out from under our feet,” said Kristin Schmitt, 40, of the plant closure in the Bavarian region of Bamberg, one of Germany’s auto supplier hubs.
The couple, who have three children, still hopes managers at their Michelin tire factory change their minds, but the risk of unemployment looms large – and not only for the Schmitts.
The German auto sector is expected to cut nearly a tenth of its 830,000 jobs in the next decade, according to the VDA industry association.
Some think-tanks and government officials fear that the toll will be higher as electric cars provide less assembly work than combustion engine vehicles, simple work steps are replaced by automation and companies relocate production.
This is not yet 1970s Detroit, a U.S. car center that was plagued by urban decay as factory relocations, cheaper imports and higher fuel prices destroyed jobs.
But the danger is growing, automotive companies, workers, as well as regional and labor leaders, told Reuters.
Different firms are taking different steps. At the Schmitts’ plant in Hallstadt, workers are trying to avoid forced layoffs; at a Bosch factory in nearby Bamberg, pay cuts and reduced hours have been agreed, as has investments in new fuel-cell technology.
With pockets of rising joblessness in the affluent, auto-producing heartlands of Bavaria and Baden-Wuerttemberg in southern Germany, there are serious implications for a country that relies on the car industry for roughly 5% of its economic output and, and an important part of its national identity.
“Germany is entering uncharted waters. The transition could well mark the end of the golden age for cars as a mass employer,” said Stefan Bratzel, head of the Center of Automotive Management, a German research institute.
“For politics, it’s a ticking time bomb.”
Read rest at Reuters
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