In the first month of the year, tens of thousands of tech workers were laid off. However, the financial troubles of internet behemoths like Google, Amazon, Microsoft, and others haven’t affected the auto sector in the same way.
Regulars like Ford and GM have not made any announcements that come close to the massive layoffs that resulted in the unemployment of more than 55,000 tech workers early this year.
There have undoubtedly been some setbacks. For example, Ford prepared to eliminate 3,200 jobs in Europe, and 1,350 workers faced job losses when Jeep manufacturer Stellantis idled operations at a plant in Illinois in February.
However, since the auto sector has already seen significant workforce restructuring over the past few years, massive new cuts are not an industry-wide necessity right now.
According to Richard Surridge, founder of the recruiting company AVANT Future Mobility, “Legacy automakers have spent the last three years figuring out how they’re going to go after electrification, autonomous driving, or increasing ADAS rather than full autonomy—and their connected car strategy.”
Because of low loan rates and a constant flow of fresh investor capital, tech companies experienced nearly uninterrupted growth over the past decade. Now, the tech sector is going through its first significant period of budget restraint as these companies move into a new stage within a changing economy.
Surridge observed that the tech sector has the opposite personnel issue from the automobile sector, saying, “All of the tech companies are a touch bloated.” In contrast, to fully pursue the future of mobility—which mostly entails electrification, batteries, and software—”Legacy Auto is underpopulated.”
The downsizing phase of the auto sector began years ago
Automakers previously made changes to their workforce before and throughout the pandemic in order to prepare for the enormous EV transition and the arrival of other industry-changing shifts.
For instance, Ford eliminated 7,000 positions in 2019. In response to a protracted union strike, GM also cut tens of thousands of employees and closed factories that same year. These reductions were made by both businesses as they got ready to revamp their operations for an electric future.
Martin French, managing director at the consultancy Berylls, noted that his company has grown accustomed to witnessing the automobile sector adjust and downsize over the course of many years. He pointed out that the bankruptcy filings of GM and Chrysler in 2009 taught the whole automobile sector many difficult lessons, causing many to take a defensive, proactive stance rather than scrambling to respond to difficult economic situations as they arise.
Tech job losses may be advantageous for the auto industry
While the technology sector eliminates thousands of jobs, legacy automakers are actually in dire need of software and engineering personnel. According to experts and executives, traditional car companies are taking advantage of hiring possibilities created by these tech layoffs.
Recent layoffs at tech-focused auto firms like Arrival, Rivian, and Britishvolt, as well as the shutdown of autonomous driving startup Argo AI, are providing a new talent pool.
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This influx of available workers could greatly help established automakers that are still seeking to expand their tech talent for recently established electric vehicle divisions.
According to Stephen Beck, founder and managing partner of consultancy cg42, companies like Ford and GM would be wise to snag this talent.
“The need for skill is very high compared to electrification, contemporary manufacturing, networking, et cetera,” Beck added. “The battle for talent is continuing in the automotive business, and the talent pool is still quite narrow.”
Ultimately, the wave of tech worker layoffs presents a unique opportunity. For software engineers and IT professionals facing sudden unemployment, the evolving, tech-hungry auto industry offers a promising new horizon.