Employees, investors and consumers alike have been holding their breaths: the German car industry, which directly employs 830,000 people and indirectly supports another two million jobs, announced that it will significantly reduce jobs over the next three years to come.
Around 50,000 jobs, including in the industry’s supply chain, are at risk as German car giants are moving from a less profitable traditional businesses to invest in the e-mobility sector. “In total, one should expect a loss of 233,000 automotive industry jobs in Germany by 2030,” predicts Ferdinand Dudenhöffer at the Center for Automotive Research (CAR) of the University of Duisburg-Essen.
As the traditional auto industry faces unprecedented challenges to its existence, many call for an “all-hands-on-deck” situation. The industry cannot afford missing out of the contributions of its top talent, both women and men. Yet it risks overlooking an unique opportunity to fully harness its diversity.
Given the challenges faced by the automobile industry to develop more climate-friendly mobility solutions and secure new consumer markets, the continued promotion of gender diversity in the sector might be a winning formula.
The Business Case for Gender Diversity
According to Deloitte, there is a talent crisis in the global automotive industry at a time that requires solutions to complex issues facing the mobility sector, including vehicle connectivity and self-driving cars.
Developing a competitive advantage in this environment requires talented professionals with diverse skills and experiences. It demands employees open to new opportunities for innovative and creative solutions.
Women are a critical component of the potential solution, yet female employees represent only a quarter of the sector’s global workforce. As the industry moves into implementation of job-saving schemes, it will have to ensure that gender diversity gains made over the past years will not be lost.
The War for Top Talent
In Germany, the percentage of women employed in the Manufacture of Motor Vehicles, Trailers, and Semi-Trailers sector is among the lowest (at 17.6%) compared to the European average of 24.2% (Eurostat Database, 2018).
Similarly, the automobile industry numbers of women in leadership, while at a slight increase, have remained low. In 2018, only 16 women (8%) were executives in the top 20 motor vehicles and parts companies in the Fortune Global 500 (Catalyst). According to 20-First’s Automobile Gender Score Card, over ver half of the top 20 companies in this industry had zero women on their executive teams in 2018.
Yet, over half (56%) of C-suite leaders in the global automotive industry point to women as a critical pool of underutilized talent (Catalyst). This is also true for the German car industry which through a number of diversity & inclusion initiatives has been looking to better attract, retain and promote female talent.
Women represent an untapped and underutilized resource who might be able to help German automotive companies take a competitive advantage and reposition the German car industry globally.
The Competition for Car Sales and Consumer Preferences
Importantly, consumer preferences and low numbers of car sales remain of concern to the German automotive industry during times of global economic slowdown, further compounded by the US-China trade war and the risk of Brexit: in 2019, the global car industry will have sold 4 million fewer vehicles than last year, according to the Association of the Automotive Industry (VDA), the lobby group for the German auto industry.
In the U.S., nearly two thirds (65%) of new car buyers are women. This compares to overall only 32% of new car purchases by women in Germany.
According a study by the Center for Automotive Research (CAR) compiling 2016 data, 18% of Mercedes-Benz customers were women. This compared to 26% of customers at BMW and 26.6% at Audi. In the lead were Volkswagen with 33.8% and Opel with 35.4%.
Particularly relevant to the “diesel versus electric” car purchasing options, recent German research suggest that women are more concerned about the environment: twenty-nine percent of women v. 23% of men would sell their car if it does not meet certain emission standards.
The European Institute for Gender Equality (EIGE) points out that typically women and men have different modes of transport: men are more likely to have a car, while women are more likely to be dependent on slower non-motorised transport (such as bicycles) or public transport in urban settings.
EIGE’s recent 2019 Gender Index statistics reveal that in Germany, men spend more time commuting to and from work than women (around 49 minutes per day for men and 42 minutes for women).
One would expect that women are naturally drawn to using car-sharing services: for example, the annual distance travelled by women tends to be lower than that of men. Moreover, research suggests that women tend to be more concerned about sustainability issues, another plus for car-sharing services given overall lower emissions.
Yet, while Europe accounts for 50% of the world car-sharing market (with further growth expected), women are surprisingly underrepresented in the population of car-sharers (European Commission).
Why are women underrepresented in car sharing services, one may wonder? It turns out, women use more “chained-trips”. In other words, rather than completing a trip to one destination and then returning home, they tend to aggregate multiple destinations. A 2018 study by the Mobility Lab discovered that women in Germany would be more likely to use car-sharing services if cars were closer by, offered car seats, and did not require the user to empty/clean the car after each trip.
Women are a key consumer market of automobiles today, and will play an even more important role in the future. Authors of the Shell report Pkw-Szenarien bis 2040 predict that in 25 years, 414 women of 1000 owners will have their own cars (up from 351 today), while men’s car ownership will decrease by 6% (Forschung & Wissen).
Gender Diversity as Solution
Many German automotive companies recognise diversity as key to their business success. In fact, the German automobile industry has long been leading the ‘diversity at the workplace’ topic in Germany. The German Employer Ranking (”Arbeitgeber Ranking”) website especially highlights the gender equality initiatives of Daimler, Volkswagen and Audi as companies who “count on diversity”.
Daimler , which alone plans to cut 10,000 jobs by 2022 (two-thirds of which are likely to be jobs located in Germany) is committed to increase its women in leadership numbers to at least 20% by 2020. At Volkswagen AG, the percentage of women employees remains below 20%, while in middle management women represent 15.5%. The company’s “Together-Strategie 2025“ has a focus on gender equality as part of an overall goal strengthen diversity. Volkswagen’s Audi brand aims to eliminate 9,500 (or more than 15%) of more than 60 thousand positions in Germany by 2025. Audi AG too has invested in gender equality as part of their “She and Audi” initiative. BMW, which announced plans to significantly reduce benefits and working hours affecting thousands of workers, considers diversity as one of their key business factors for success.
Naturally, the upcoming changes in Germany’s automobile industry are having effects on the industry’s entire supply chain: auto part supplier Bosch announced plans to cut more than 2000 positions within the next two years, mainly in diesel-related jobs. Continental, the German automotive manufacturing company specialised in brake systems, will cut 7,000 positions in Germany (the overall goal is to cut 20,000 positions worldwide in the coming 10 years). Mahle, another supplier with headquarters in Germany and 80 thousand employees globally, announced planning to close some production facilities abroad.
What do all the companies, automobile giants and their suppliers have in common? They agree that “we can only be successful economically if we acknowledge and leverage the existing diversity.” Audi, BMW, Daimler, and Volkswagen are members of the Corporate Charter of Diversity for Germany Association. All (as well as Bosch, Continental and Mahle) are among more than 3,300 signatories of the Corporate Charter of Diversity for Germany (Charta der Vielfalt), a voluntary initiative of companies to actively promote diversity in their businesses.
In addition to diverse workforces, the Charter acknowledges the diverse needs of customers and other business partners.
Gender Implications Retrenchment
Seeing through a massive retrenchment exercise promises to be a challenging task for the automobile industry – for many it will not only be financially, but also emotionally a difficult time. What will matter is to ensure a highly transparent retrenchment process with clear selection criteria.
“Worker potential” and “commitment to the business”, while attractive criteria, are often difficult to measure and verify objectively. Thus, it is not uncommon that a retrenchment process takes into consideration other measurements such as “length of service”, “performance record”, “knowledge and skills”. Accordingly, those whose skills and qualifications are transferable and in future demand (for example for the e-mobility sector) may have less to worry about.
In general, it is good practice for any employer to consider the potential gender impacts of its retrenchment process to ensure that women are not disproportionately disadvantaged. Where there is a predominantly male workforce, such as in the automobile industry, there are likely to be substantial gender impacts to be considered.
For example, women may occupy lower grades within the organisation or may have less service compared to men as a group overall. In such cases, management will have to evaluate and decide whether such indicators are appropriate and/or truly the best way to carry out the retrenchment process.
Some automakers already announced that they are looking to reduce jobs in “support functions” such as in human resources management, the marketing or legal departments. These areas are often dominated by women.
In addition, at least one automaker suggested exploring various ‘early retirement’ options to meet announced retrenchment targets. Here, too, women (who typically are more likely to have taken career breaks due to caring responsibilities) may be disproportionately affected when they have not yet maximised their pension contributions.
Unconscious bias can also play a role in retrenchment decisions: for example, women at the workplace may be less networked to powerful decision-makers involved in the retrenchment process who can “protect” them. Second, it may emotionally be more difficult to let go a (male) colleague with financial responsibilities for many family members than to let go of the (female) colleague who they may consider as “second income earner.”
As the end of this calendar year is fast approaching, 2020 promises to be an important year for Germany’s automobile industry to position themselves: Vis-à-vis the future of electric vehicles as well as the future of gender diversity.
Just last week, Germany’s Automobile Association (VDA) unanimously elected Hildegard Müller as its new president, the second female business leader at the top in the history of this lobby group. Is this another indication that the automobile industry values women’s leadership at this critical moment in time?
One thing is clear. Formula E, who aims to make electric transport powered by renewable energy into the global norm, is already recognising “gender diversity” as a cornerstone of future car racing. Formula E expects to turn a profit for first time in 2020. Moreover, Formula E founder and chairman, Alejandro Agag, is making a targeted effort to increase the pool of women race car drivers: he plans to have tests for women at least once a year – to promote female talent!