Roughly 5% of Honda Japan’s workforce opted for early retirement. This isn’t about Coronavirus, it’s about the growing realization car manufacturers need far fewer people in an electrified future.
Electric Vehicles have far fewer moving parts than their fossil fuelled counterparts. Simpler to build, they need fewer people on the production line. How much smaller the workforce needs to be is still open to debate, although 30-50% seems to be the consensus.
Honda’s move is an interesting way to solve this problem. They offered employees over 55 a generous retirement package, perhaps heading off future industrial tensions. Other manufacturers have been looking at how to address “right sizing” their workforces as more EVs reach the production line. Promises of reskilling, shrinking through “natural wastage” and other euphemisms appear to be doing little more than kicking a problem a few years down the line.
Unusually this is a move that isn’t going to help the bottom line of manufacturers. EVs may be cheaper to build, but the raw materials used in batteries are far more expensive and offset any nominal savings from fewer people to pay.
For Japan, a smaller workforce might work in its favour given the well documented population decline. Other industrial nations could find unemployment an increasing problem as manufacturers downscale, and the effects ripple through the economy. Longer term, it’s possible working on an automobile production line could be as compelling a career as farming has become.
While the rush to electrify fleets is welcome, there are serious questions for policy makers to answer. With all eyes on how many EVs manufacturers can offer, it will be too easy for issues in the workforce to catch us by surprise.