Automotive industry

Comprehensive analysis of the evolution of the automotive sector in Europe

European Commission

Submitted to the European Commission, DG Employment, Social Affairs and Equal Opportunities Executed by: Groupe ALPHA Alphametrics DG EMPL project VC/2007/0266
Automotive industry This publication is commissioned under the European Community Programme for Employment and Social Solidarity - PROGRESS (2007-2013). This programme is managed by the Directorate-General for Employment, social affairs and equal opportunities of the European Commission. It was established to financially support the implementation of the objectives of the European Union in the employment and social affairs area, as set out in the Social Agenda, and thereby contribute to the achievement of the Lisbon Strategy goals in these fields. The seven-year Programme targets all stakeholders who can help shape the development of appropriate and effective employment and social legislation and policies, across the EU-27, EFTA-EEA and EU candidate and pre-candidate countries. PROGRESS mission is to strengthen the EU contribution in support of Member States commitment. PROGRESS will be instrumental in: 1. providing analysis and policy advice on PROGRESS policy areas; 2. monitoring and reporting on the implementation of EU legislation and policies in PROGRESS policy areas; 3. promoting policy transfer, learning and support among Member States on EU objectives and priorities; and 4. relaying the views of the stakeholders and society at large For more information see: http://ec.europa.eu/employment_social/progress/index_en.html The information contained in this publication does not necessarily reflect the position or opinion of the European Commission.
photos 123RF For any use or reproduction of photos which are not under European Communities copyright, permission must be sought directly from the copyright holder(s).

European Commission

Automotive industry
Comprehensive analysis of the evolution of the automotive sector in Europe Executive Summary
The full study is available under the link http://ec.europa.eu/restructuringandjobs

NOTE: The study conducted in the end of 2007/beginning of 2008 was a pilot one. It served as a test for the methodology that was subsequently used (in an improved way) in all the other 17 sectoral studies. On the other hand, unlike the other ones that focussed mainly on the skills issue, the main purpose of the Automotive Study was to support the European Partnership for the Anticipation of Change in the Automotive Sector (see http://www.anticipationofchange.eu/fileadmin/anticipation/Logos/EU_partnership_en.pdf ) that was signed by the European Commission and the main organisations of the sector (employers and trade unions) and presented in the Automotive Forum of October 2007 (see http://ec.europa.eu/social/main.jsp?catId=782&langId=en&eventsId =168&furtherEvents=yes). This Partnership is being developed by the partners through a two-year Work Programme that includes also actions on anticipation of skills needs (see http://www.anticipationofchange.eu/). Finally, it must be underlined that the study has been finalised before the emergence of the current economic crisis. Even if it describes the structural adjustments that the industry and their workers face, it does not take into account the effect of the downturn on the sector, significantly more severe and brutal than in any of the other sectors analysed.

European Commission Directorate-General for Employment, Social Affairs and Equal Opportunities Unit F3 Manuscript completed in 2009

Neither the European Commission nor any person acting on behalf of the Commission may be held responsible for the use that may be made of the information contained in this publication. 123rf For any use or reproduction of photos which are not under European Communities copyright,permission must be sought directly from the copyright holder(s). More information on the European Union is available on the Internet. (http://europa.eu).

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Preface
Education and training, in the context of a lifelong learning perspective, are an indispensable means for promoting adaptability and employabi lity, active citizenship, personal and professional fulfilment. Investment in human capital through better education, and the development of skills and competences should be increased. It is important to anticipate skills needs and also skills gaps which are emerging in the European labour market, as well as to improve the matching of knowledge, skills and competences with the needs of society and the economy, as a means to increased competitiveness and growth, as well as to greater social cohesion, in Europe. This is more important than ever in the current situation of crisis that will undoubtedly lead to substantial changes in economic activities in Europe coming years. With this in mind, the Commission has elaborated a set of analysis of emerging competences in 18 sectors. Those analysis are available to all economic, social and professional organisations, educations and training institutions, etc. They can help them to refine their stra tegies and to engage into forwardlooking actions.

Robert Verrue Director-General, Employment, Social Affairs and Equal Opportunities DG

Automotive industry

Aims and methodology

The renewed Lisbon strategy and European Employment strategy stress the need for Europe to place more emphasis on a better anticipation of skill needs together with the need to reduce labour markets mismatches. These policies aims also at minimising social costs and facilitating adaptation during restructuring processes through a better anticipation and positive management of change. Globalisation, technological change, climate change and demographic developments (including ageing and migration) in that respect pose huge challenges, comprising both risks and opportunities. In that context, the Commission has launched recently the New Skills for New Jobs initiative together with other related European projects aimed at identifying future job and skills needs using quantitative modelling approaches. While having advantages of robustness, stakeholders as well as the European Commission identified a clear need for complementary more qualitative forward-looking analysis. Consequently, the European Commission commissioned in 2007 a series of 18 future-oriented sector studies (horizon 2020) on skills and jobs following a uniform, qualitative methodology. Results of these studies have become available in summer 2009, and will be followed
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by a number of other initiatives over the oncoming year and beyond. The current economic crisis calls for the reinforcement of policies aimed at developing the employability of the workforce. This project fits within this policy objective.

18 sector studies, one methodology

The results of this study aim to serve as a guide in launching further EU and other actions to promote the strategic management of human resources and to foster stronger synergies between innovation, skills and jobs, taking into account the global context and encouraging adaptations to national and regional level. To validate, add and complement the findings of the project and to make sure that results are disseminated as broadly as possible across Europe, relevant stakeholders including European social partners, other services from the Commission with the expertise in the sectors analysed, representatives from the European Parliament, the European Economic and Social Committee, the Committee of the Regions, Eurofound and Cedefop were involved in the project from the beginning.

Aims and methodology

Sectors Covered Automotive industry Defence Textiles, wearing apparel and leather products Printing and publishing Chemicals, pharmaceuticals, rubber and plastic products Non-metallic materials (glass, cement, ceramic) Electromechanical engineering Computer, electronic and optical products Building of ships and boats Furniture and others Electricity, gas, water & waste Distribution, trade Hotels, restaurants, catering and related services Transport Post and telecommunications Financial services (bank, insurance and others) Health and social work Other services, maintenance and cleaning

A standard predefined methodo logy was developed by a panel of experts under the direction of Prof Maria Joo Rodrigues and applied to all 18 studies to ensure consistency and comparability of the results, the studies being produced by different contractors. Based on the basic methodological framework, each contractor executed 7 defined steps, starting with the mapping of main trends, key drivers of change, leading to scenarios of plausible evolution and their implication for employment at the year 2020 time horizon, the identification of implications

for emerging competences and occupation profiles in terms of jobs expanding, transforming or declining, and their implications in terms of strategic choices and subsequent recommendations for companies, education and trai ning systems, social partners and public authorities at all levels. This foresight methodology implies an approach combining desk research and expert knowledge. At the end of each sector study a final European workshop for the sector was organised by the Commission to validate results as well as refine recommendations. In
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Automotive industry

addition to European Commission and Eurofound staff, about 20 experts per workshop from industry, academia and sector organisations including workers and employers representatives with a sound knowledge of jobs and skills were invited to comment and provide recommendations to the report as part of the methodology.

of all sections were summarised in a SWOT analysis and were used as input to identify key drivers. Drivers of change On the basis of the mapping of the sector, a set of key drivers, sector specific or not, was identified. Literature review and expert knowledge of the sector were then used to define a conclusive list of sector-specific drivers. Drivers were classified as exo genous or endogenous depen ding on the ability for the sectors stakeholders and policymakers to influence them. These lists of drivers were also discussed in the experts p anel workshops. Qualitative scenarios and implications for employment trends The set of selected sectoral drivers of change served as an input to develop scenarios for the evolution of the sector and implications for different occupations (composition of employment / emerging competences) in the period 2008 to 2020. Implications of scenarios and emerging competences Scenarios were built to assess the implications for the level (absolute

Brief description of the methodological steps

Mapping The main purpose of this analysis was to provide factual background to identify key drivers used in the subsequent scenario development. Consequently, the Report analysed recent sector developments and trends and, at the same time, depicts the current state of play in the sector with an emphasis on innovation, skills and jobs. It was based on an analysis of available time series data and relevant existing studies. It analysed 1) structural characteristics (production, value added, employment in various dimensions, and related factors); 2) the value chain; 3) technological change and innovation; 4) trade and international competition as well as 5) regulation. The results
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Aims and methodology

demand) and composition (relative demand compared to other job functions) of employment of different job functions by 2020. New and emergent skills required by different job functions were identified based on the analysis of the evolution of past data on employment by occupation, on the analysis from the present situation and of experts comments during the workshop. The focus was on identifying and describing key and critical competences for the future for each of the major occupational function in relation to the different scenarios elaborated. These formed the basis for the strategic choices identified in a next step. Strategic choices for companies to meet emergent competence needs Each sector study assessed possible strategic choices in terms of feasibility and actor involvement. The options comprised recruiting workers from other sectors, countries, recruiting graduates, re-training employed workers as well as changing work organisation. Specific implications for education and training Options to improve or to adapt education and training systems

were looked at in this step of the methodology, focussing more particularly on the specific role to be played by sectoral organisations, educational institutions and governments such as a stronger cooperation between stakeholders or an increased flexibility through modularisation of education and training. Recommendations Each sector study contains specific recommendations to the sector. However, with the studies analysing Europe as a whole, the recommendations remain ge neral and need a follow-up at the national and regional level. The intention of the project especially in the follow up phase is to use the results to stimulate stakeholders at lower territorial levels (national / regional) to work out results in more details, repeat and adapt this exercise to local needs rather than providing standardised solutions. Some general recommendations call for an intensified co-operation between relevant stakeholders, the need to invest strongly in human capital, more standardised regulations, enhanced VET to increase social mobility and coordinated National and European Vocational Qualifications.
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Automotive industry

Objectives of the study

The concern of this study is to present an overview of the European automotive industry 1 and the
1 The automotive industrys NACE code [European activity code] is 34.00

changes which have occurred over recent years and to consider the potential developments over the next few years and their implications for jobs and skills.

Main economic and employment trends

The automotive industry accounts for around 1.5% of GDP in the EU and employs just under 2.4 million people, around 6.5% of the total employed in manufacturing or just over 1% of total employed in the EU economy as a whole. If jobs in industries and services supplying the automotive industry are taken into account, employment is increased by 3-4 times. In Germany, the industry is directly responsible for 2.4% of all jobs in the economy and 13% of all jobs in manufacturing. Over the past decade, both the share of value-added and employment in the industry have risen slightly across the EU as a whole, but this disguises marked shifts in the relative importance of the industry in different Member States (Table 1). Between 1995 and 2006, employment in the industry is estimated to have increased by 23% in the EU, though by less in the EU15 countries and much more in the new Member States. In 2006, the latter accounted for some 19% of the total employed in the industry in the EU as opposed to under 14% 11 years earlier. Whereas the German share of employment rose to 39% of the total over these 11years, that of other EU15 Member States fell from 51% to 41%.

Main economic and employment trends

Table 1 Employment in the automotive industry in the EU, 1995-2006

1995 EU27 EU15 DE Other EU15 New MS EU27 EU15 DE Other EU15 New MS EU27 EU15 DE Other EU15 New MS EU27 EU15 DE Other EU15 New MS 1997 1999 2000 2001 2002 2003 2004 2005 2006

Number employed (000s) 1 927 1 661 674 987 266 100.0 86.2 35.0 51.2 13.8 100.0 100.0 100.0 100.0 100.0 1.0 1.1 1.8 0.8 0.6 2 033 1 746 702 1 044 287 100.0 85.9 34.5 51.4 14.1 105.5 105.1 104.1 105.8 108.0 1.0 1.1 1.9 0.9 0.6 2 158 1 847 762 1 145 311 100.0 85.6 35.3 53.0 14.4 112.0 111.2 113.1 116.0 117.1 1.0 1.1 1.9 0.9 0.7 2 206 1 870 769 1 108 336 100.0 84.8 34.9 50.2 15.2 114.5 112.6 114.0 112.3 126.2 1.0 1.1 2.0 0.9 0.8 2 255 1 912 806 1 105 343 100.0 84.8 35.8 49.0 15.2 117.0 115.1 119.6 112.0 129.0 1.0 1.1 2.0 0.9 0.8 2 250 1 893 833 1 060 357 100.0 84.1 37.0 47.1 15.9 116.8 114.0 123.6 107.4 134.1 1.0 1.1 2.0 0.8 0.9 2 254 1 903 844 1 060 351 100.0 84.4 37.4 47.0 15.6 117.0 114.6 125.1 107.4 131.9 1.1 1.1 2.1 0.8 0.8 2 347 1 978 923 1 055 368 100.0 84.3 39.3 45.0 15.7 121.8 119.1 136.9 106.9 138.4 1.0 1.1 2.1 0.8 0.9 2 295 1 915 910 1 005 380 100.0 83.4 39.6 43.8 16.6 119.1 115.3 135.0 101.9 142.9 1.0 1.1 2.2 0.7 0.9 2 360 1 906 930 976 454 100.0 80.8 39.4 41.4 19.2 122.5 114.8 137.9 98.9 170.6 1.1 1.1 2.4 0.7 1.0

% employed in automotive industry in EU

Change in employment (1995=100)

% Total employed in each group/country

Automotive industry

The majority of those employed in the automotive industry in the EU15 countries are manual wor kers (around 60% in total), most of them employed in skilled or at least semi-skilled jobs, though the relative importance of skilled workers varies across countries. In the new Member States, the figure is closer to 70%, most of them semi-skilled. Most of the others in employment are trained professionals or technicians, many of them engineers (Table 2).

The relative number of en gineers and as other specialist pro fessionals and technicians increased between 2000 and 2007 throughout the EU, while the number employed as skilled manual workers, especially as mechanics, declined. This decline was es pecially large in the new Member States, where it was accompanied by a counterpart increase in the number of machine operators and production line workers (i.e. semi-skilled manual workers).

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Main economic and employment trends

Table 2 Employment in the automotive industry by occupation, 2000 and 2007

% Total employed in the industry EU15 2000 Manager Production Other Professionals Engineers Computer specialists Other professionals Business, finance, sales Other Office workers Sales + Service workers Skilled manual workers Metal moulders Tool makers Mechanics Electricians + others Semi-skilled workers Production line Drivers Low-skilled workers 4.5 2.0 2.5 19.9 12.3 1.3 6.3 2.2 4.1 8.0 0.8 33.8 7.7 5.2 12.3 8.5 26.3 23.7 2.6 6.6 2007 5.2 1.8 3.4 25.8 15.2 1.6 9.0 3.2 5.8 7.4 0.8 29.1 6.6 4.5 9.4 8.6 25.2 21.9 3.3 6.6 DE 2000 3.5 1.5 2.0 23.2 13.0 1.5 8.7 2.5 6.3 8.5 0.9 41.9 8.8 6.9 13.1 13.1 15.1 12.8 2.2 7.0 2007 4.3 1.7 2.7 27.9 15.7 1.6 10.6 3.9 6.7 8.3 1.1 34.4 6.7 6.0 11.0 10.7 16.1 13.5 2.5 8.0 FR 2000 2.7 1.2 1.5 23.2 18.4 1.3 3.4 1.5 2.0 5.5 0.4 32.8 5.5 5.8 15.5 6.0 32.9 29.4 3.5 2.5 2007 4.8 1.6 3.2 30.0 22.6 2.0 5.4 1.7 3.7 6.4 0.5 30.0 3.7 4.7 8.8 12.8 25.5 20.3 5.3 2.8 IT 2000 2.6 2.2 0.5 12.7 7.6 1.1 4.1 1.9 2.2 12.8 1.2 22.1 7.1 1.3 11.2 2.6 43.1 40.5 2.7 5.4 2007 2.8 0.4 2.4 25.9 14.0 1.4 10.5 2.7 7.9 8.8 0.7 19.9 6.3 2.2 6.8 4.6 35.5 34.4 1.2 6.4 NewMS 2000 1.8 0.9 1.0 9.3 3.9 0.7 4.8 1.1 3.7 2.8 0.7 18.6 2.7 8.5 4.0 3.5 13.4 12.0 1.4 3.3 2007 3.3 2.0 1.3 18.8 8.5 2.0 8.3 1.6 6.7 5.0 0.3 25.4 8.3 6.7 5.3 5.1 44.8 41.7 3.2 2.3

Source: EU Labour Force Survey Note: The figure for 2000 represent an average of those for 1999 and 2000 and the figures for 2007, an average of those for 2006 and 2007 in order to smooth fluctuations in the LFS data

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Automotive industry

In terms of production, European manufacturers account for around 20 million vehicles each year, or 33% of total world output, less than producers in Asia/Oceania but more than those in North America, so attesting to the competitiveness of Europes automotive industry. The strength of the European industry has principally been due to its ability to adapt to a series of major changes over the past 20years: two oil crises, several substantial regulatory changes, technological advance, EU enlargement and global competition (notably from Japan). The adaptations concerned have been associated with major consolidation of OEMs, increased outsourcing, restructuring and relocation both within the EU and to neighbouring countries. Despite its relative strength, there are weaknesses in certain parts of the industry (Table 3): because of slow growth of the West European market, manufacturers need to invest substantially

in product differentiation, which leads then in turn to expand into international markets in order to achieve larger sales volumes. While specialist manufacturers are well placed to face international challenges, it is more difficult for generalist manufacturers; competition from low-cost manufacturers has become a major challenge. Pressure is passed on from OEMs to equipment manufacturers, whose share of the industrys added value has risen over the past 20 years. Over this period, European equipment manufacturers have become world leaders, but faced with increasing requirements and pressure to contain prices, they are currently in a difficult situation. Since they account for the bulk of jobs in the industry, the difficulties they face have serious implications for employment across the EU, especially in the major car-producing countries.

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Main economic and employment trends

Table 3 SWOT analysis of the European Automotive Sector

STRENGTHS OEMs Broad range of models and excellence in high-end segment Diesel technology expertise Strong financial situation (compared to US) Relatively flexible value chain Equipment suppliers Highly innovative and leadership position in numerous segments Internalisation of sales and production WEAKNESSES Small size of OEM generalists Weak capacity in hybrid technology Relatively weak internationalisation, especially R&D Declining operating income and weak financial structure Threat from US and Japanese investment funds Extreme weakening of the small supplier network Regional and political aspects Emerging regional system (production, school, innovation clusters) Advanced regulatory framework Many differences in fiscal conditions Non-integrated EU market Regional competition versus complementary networks Regulatory policy of little importance in international trade negotiations Coordinated export policy Jobs High level qualifications (even in new Member States) High productivity Strong automotive culture Social model Weak culture of change and mobility Ageing population Short supply of skilled labour

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Automotive industry

Main drivers of change

There is significant potential for growth in the automotive industry both generally in the world and in Europe in particular. Driven by the needs of emergent economies (China, India, Russia), new actors are entering the global market, intensifying competition in the more mature European markets as well as in emergent ones. Four major drivers are important for the future of the European automotive industry: Changing society and evolution of demand: the need for mobility remains high in mature economies and increases in emergent ones, but is accompanied by new pressures and aspirations: environmental concerns, urbanisation, demand for differentiation, increased energy prices. The car becomes less a prized posse ssion more a means of transport (which increases competition with other modes, especially in cities, and raises the importance of user costs). Emerging technology: the car industry has always been one of the most innovating sectors and is likely to be even more so in the future. Three areas of technology are particularly important: electronics and ICT, new composite materials and new, non-fossil fuel forms of propulsion. Company strategies: the European industry is composed of internationally-recognised specialist manufacturers and large generalist ones less involved in exporting. The pace of internationalisation of the latter will be important in competition with low cost producers outside Europe as will be the range of models they can offer and the innovations incorporated in them. Policies of regulation: such policies include fiscal measures as well as the regulatory framework as such and affect both the supply side, by imposing, for example, limitations on CO2 emissions, and the demandside by raising prices, as well as stimulating new technologies.

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Scenarios and implications for employment

Table 4 Drivers of change in the automotive industry

Changing society and evolution of demand Need for mobility Greater diversity Rich versus poor Urbanisation Ageing population Pressure from energy prices Emerging technology ICT (incl. nanotechnology) New materials New propulsion (hydrogen, fuel cells) Company strategies Internationalisation Mergers and acquisitions Marketing choices (premium, low cost, ) Innovation versus cost oriented policy Relocation

Changing regulation (fiscal, RD policy, regulatory framework)* Environmental friendliness (incl. interoperability), fuel consumption and emissions, safety, fiscal policy, Eco taxes, R-D incentives * These factors interact with the three above.

Scenarios and implications for employment

The response of the European industry will depend on its dual capa city to innovate and to expand into global markets. These are major challenges, notably for generalist and equipment manufacturers. A pessimistic scenario: Reduced attractiveness of advanced passenger cars, demonstrates the risk of failure, which would mean a significant increase in the lowcost vehicle share of the market, leading to major restructuring and relocation of production.

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Automotive industry

Table 5 Reduced attractiveness of advanced passenger cars scenario

Changing society and evolution of demand Price sensitive demand Premium cars only for enthusiasts Low demand for multimodal transportation Little consideration for environmental aspects Slow growth of EU market Emerging technology Lack of innovation except in premium cars Company strategies Internationalisation and partnership with emergent car manufacturers Development of low-cost car ranges Consolidation and relocation of equipment manufacturers

Changing regulation (fiscal, RD policy, regulatory framework)* Little coordination in EU of Environmental, Safety and Transportation policies Lack of investment in R&D and in new technology Uncoordinated, defensive fiscal policy promoted by Member States

An optimistic scenario: New cars for safe and sustainable transport demonstrates the

opportunities for an industry that implements major innovations and has export success

Table 6 New cars for safe and sustainable transport scenario

Changing society and evolution of demand High environmental and safety considerations Increasing prosperity in new Member States especially Demand for new technology, design and services Emerging technology New technologies (material, electronic, propulsion) New designs New services (including transportation services) Company strategies Internationalisation Partnership between car and equipment manufacturers Investment and RD expenses High level of segmentation Growth in services activity

Changing regulation (fiscal, RD policy, regulatory framework)* High level of coordination in EU on Environmental, Safety and Transportation policies Investment in R&D and new technology but also in transport infrastructure Coordinated fiscal policies promoted by Member States

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Scenarios and implications for employment

Both scenarios probably involve significant short-term job losses in the EU15, since these are already in the pipeline as a result of the massive relocation of ge neralist manufacturers to Central European countries and neighbouring countries.

The optimistic scenario differs in the medium-term since industry capa city expands and there is large-scale innovation by generalist manufacturers which increase exports to the rest of the world. This benefits equipment suppliers and confirms their world leadership position.

Table 7 Summary of the impact of the two scenarios on the industry

Less attractiveness of automotive industry OEMs Generalist: massive restructuring - consolidation, hostile takeover risk Specialist: continuing in niche segment and export markets New cars for safe and sustainable transport Generalist: restructuring through mergers/acquisitions and purchase of new activities - opportunity of joint ventures with Asian partners - innovation and cost strategies - new form of cooperative Specialist: continuing in niche segments and export markets - Regrouping of major system manufacturers through external growth - Creation of hierarchy of value chain systems, modules, components - Relocation of component manufacturers - creation of large component suppliers - Improvement of transport conditions - Specialisation in Europe around high-innovation car design centres - New Member States: leading equipment manufacturing area - Restructuring, but also creation of jobs - Major training needs - Major need for qualified labour in both EU15 and new Member States

Equipment suppliers

- Major restructuring: closure and voluntary liquidation - Consolidation with newcomers from emerging countries - Hostile takeover risk

Regional

-M  ajor problems for EU 15, incl. Germany - Temporary resistance of new Member States

Jobs

- Restructuring -M  ajor decline of car industry activities in Europe

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Automotive industry

Graph 1 Evolution of employment in automotive industry according to the two scenarios

+20%

+10% +5%

Short term: Uncertain trends New car Long term: Uncertain range impact Reduced attractiveness

2008 level
-5% -10%

-20%

Source: ALPHA - Alphametrics

Implications of scenarios for jobs, skills and knowledge by job function

The broad trends evident in the structure of the industry across the EU in particular, the shift towards the new Member States and in the composition of occupations, with the growth of engineering and other higher level jobs, are likely to continue over the next 5-10 years. This is likely to be the case under each of the different scenarios, though to varying extents and with differing
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implications for the scale of future skill requirements. There are unlikely to be new kinds of job emerging as such but existing jobs will tend to change in terms of the skills and competences required and the relative importance attached to these. The skills in question are likely to mean a continuing shift in employment towards:

Implications of scenarios for jobs, skills and knowledge by job function

Engineers (skilled in design, the development of driver aids and emission controls) Marketing professionals (to develop new European and export markets) Business professionals and accountants (to maintain price competitiveness) Electrical mechanics (for the increasing use of electronic equipment and devices) Managers (to organise increasingly complex operations and to locate activities in the lowest cost places) An increase in the numbers employed with these skills is likely to be a necessary condition for the optimistic scenario to become a reality. But this requires the industry to be sufficiently attractive to enable companies to recruit people with the relevant skills, which depends in turn on the prospects for growth in the industry.

At the same time, jobs for mechanics, tool makers and other skilled workers as well as for less skilled machine operators on production lines are set to decline. This is not the case in the new Member States, to which labour-intensive activities are likely to be increasingly relocated. Despite the reduction in skilled manual jobs, companies could still face recruitment problems because of the need to replace the significant number of workers due to retire in the next few years. This they will need to do in a context of fewer young people entering the labour market. The ability of the industry to meet prospective skill needs, therefore, depends only partly on the output of education and training systems across Europe. It depends equally on the success of measures to attract qualified people into the industry, on making effective use of the existing workforce and on ensuring that training is provided to update and extend their skills.

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Automotive industry

Table 7 Implications of scenarios for occupations in EU15 and new Member States
Base scenario Occupation Employment in general Manager Production Other Professionals + technicians Engineers Computer specialists Other professionals Business, finance, sales (marketing) Administrative + other Office workers Sales + Service workers Skilled manual workers Metal moulders Tool makers Mechanics Electricians + others Semi-skilled workers Machine operators Drivers EU15 NMS Growth (or Green) scenario EU15 NMS

+ +

+ + + +

++ + + + + ++ + + +

++ + +

+ + + + ++ ++ ++

+ -

++ ++ ++ ++

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Recommendations for the optimistic scenario

Recommendations for the optimistic scenario

The European automotive industry has major assets which should contribute to ensure its sustainability and growth. In the coming years, far-reaching changes are likely, in the short-term, in output and employment location, in the longer term, in skills and competencies. The optimistic scenario is dependent on several policies being adopted (on innovation, regulation, transport infrastructure and human resources).

Table 8 Main recommendations by policy area for the optimistic scenario

Policy area Policy for major innovation Stakeholders concerned Car manufacturers, suppliers, research centres, universities, EU authorities, Member States Examples of action - establish better cooperation between car manufacturers and suppliers - develop a European Research Programme - provide support for Innovation clusters and for SMEs - pursue an integrated approach on regulatory and trade policy - introduce fiscal incentives harmonised between EU countries -d  evelop new intelligent road systems - promote public/private partnerships - provide financial support for SMEs - make the sector more attractive to potential recruits - involve companies more in training and education programmes and encourage closer relations with schools and universities - special programmes for older skilled workers - improve working conditions - develop social observatories at territorial and sector level - establish effective social dialogue at company level and promote European Works Councils and social agreements

Coherent regulatory policy Infrastructure policy Education, training and social policy

EU authorities, Member States

EU authorities, Member States Car manufacturers, Suppliers, education and training institutions, EU authorities, Member States, Trade Unions

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Automotive industry

Given the challenges of the coming years with continuing restructuring combined with the emergence of new skills, two areas of policy are likely to be of particular importance:

Human resources, including continuing training Social dialogue

Table 9 Human resources policy implications of the optimistic scenario

 A primary implication of the optimistic scenario is that there is an important need to make the industry more attractive to potential recruits who have other career options.  This applies in particular to university graduates in engineering and other relevant fields of study likely to be deterred by a belief that the industry is set to decline in future years.  It applies equally to those who have completed vocational training or who are deciding which education or training programme to follow.  There is a prior need to ensure that sufficient numbers acquire the skills and competences required by the industry and that education and training systems across the EU are equipped to teach these.  It is, accordingly, important for companies in the industry to be involved in the provision of education and training, to have close links with schools, technical colleges and universities and to advise on the content of programmes.  A similar need extends to continuing vocational training, which is essential for workers to extend and update their skills as requirements change but which evidence suggests is inadequate in many parts of the industry at present.  If growth of the industry is to be achieved, there is equally a need to slow down the rate of exit of older skilled workers given the increasing difficulties of replacing their skills as falling numbers of young people enter the labour market.  More consideration could also be given to the possibility of making more productive use of older workers to help train new entrants to the industry so that they are able to pass on their skills and know-how.  More consideration needs equally to be given to ways of attracting more women into the industry, who, as in the past, will represent the main source of labour force growth in future years but who remain an under-utilised resource.  To attract more women is likely to require changes in work organisation to accommodate their need for flexible working arrangements so that they can balance employment and family responsibilities.

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Recommendations for the optimistic scenario

Anticipation of likely future changes in the automotive industry is important to limit their impact and to prevent them adversely affecting the attractiveness of the sector to potential recruits. The European Partnership for anticipation in the automotive industry is potentially an important step forward which could contribute to anticipation

at three levels: At the regional level, through regional research centres and competitive clusters At the sector level, through industry monitoring centres At company level, through expanding the role of European Works Councils and social agreements within companies

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Where to find more information?

The following information can be found on the Europa website under the address: http://ec.europa.eu/restructuringandjobs The other 17 sector studies on the analysis of the sectors evolution and future skills needs The Restructuring in Europe report The thematic restructuring forums The checklist and the toolkit on restructuring processes The training guide for SMEs The national seminars on restructuring in 27 EU countries Official documents related to restructuring policies