Ford just exposed the biggest lie of net zero
Now is not a good time to be working in Britain’s car industry. Nobody said the shift to electric vehicles was going to be smooth, but the true scale of the disruption is only just starting to be understood.
The level of reinvention required on the path to decarbonisation is almost akin to starting again. Entire business models that have existed for decades are being torn up, factories mothballed, and car line-ups dramatically scaled back.
Honda brought down the curtain on its Swindon plant in 2021, not because of Brexit as some Remainers had disingenuously claimed, but due to a need to “accelerate” its “electrification strategy” and “restructure” the Japanese outfit’s “global operations accordingly,” Honda’s Europe chief, Katsushi Inoue, said at the time.
More recently, BMW has announced it will shift production of the electric Mini from Cowley, Oxford to a new plant in China’s eastern province of Jiangsu later this year. Jaguar Land Rover had been planning to build a battery gigafactory near Bristol or Redcar, but after a row with the Government over the level of state support, has reportedly threatened to choose Slovakia instead.
Meanwhile, a new generation of start-ups that is meant to be spearheading the revolution are struggling to get off the ground. Battery hopeful Britshvolt managed to last all of a year before it collapsed after burning through its cash pile.
Ultimately the company’s business plan was deeply flawed and its prospects wildly over-egged, but none the less it is further evidence of the huge challenges inherent in trying to create not just an entirely new industry from scratch, but so too the infrastructure required to support it.
But it is the announcement of several thousand job losses at Ford that will send the biggest shockwaves through the global car sector – 3,800 in total, 2,300 of which will come in Germany, 1,300 in the UK, and the remaining 200 across the rest of Europe.
While the numbers themselves are pretty grim, it is the pointed comments from its German chief about the reason behind the redundancies that jump out.
One of the central premises of net zero is that the resulting job destruction in old industries such as car-making, but also oil and gas exploration, construction and farming, will be more than offset by the job creation in green industries such as renewable energy – but if the remarks of Ford Germany’s boss Martin Sander are anything to go by, that looks doubtful at best.
There were the usual empty corporate platitudes about recognising “the uncertainty it creates” for employees – an understatement if ever there was one – and how those affected would receive “full support in the months ahead”.
Meanwhile Tim Slatter, chairman of Ford’s UK arm, was at pains to point out that the economic backdrop was at least partly a factor. “Here in Europe … the outlook is uncertain. High inflation, higher interest rates, the ongoing war in Ukraine, cost of energy and so on,” he said.
But it was Sander who eventually cut through all the noise to lay the decision fairly squarely at the door of electrification. “There is significantly less work to be done on drivetrains moving out of combustion engines,” he said. “We are moving into a world with less [sic] global platforms where less engineering work is necessary. This is why we have to make the adjustments.”
Ford – Alex Kraus/Bloomberg
Ford’s intervention is particularly significant because it is possible to extrapolate from the latest round of job cuts and arrive at an approximate figure for the industry as a whole as it goes electric.
The redundancies make up just over 40pc of Ford’s European product development team, which includes designers, engineers and testers, and is roughly in line with boss Jim Farley’s recent warning that a company employing 183,000 worldwide would ultimately need 40pc fewer staff to develop battery models. One assumes that the figure will be roughly the same for other major carmakers.
There will be those who argue that as one of the world’s biggest manufacturers of petrol and diesel cars, it is in firmly in Ford’s interests to exaggerate the fallout, and that might have been true not so long ago.
But having been a late adopter, Ford is now among those leading the charge with a pledge to boost spending on electric vehicles to $50bn (£41bn), from $30bn previously, by 2026 and run its electric car unit separately from its legacy combustion engine operations, in a move aimed at catching trailblazer Tesla. So perhaps we should take Farley at face value.
The fate of Swindon’s Honda operations is similarly instructive but for other reasons. When the plant closed its doors for the final time, the 3,000 people that lost their jobs were promised they would quickly find new jobs – either at other local manufacturers, or under plans to transform the site from a car factory into a logistics park.
But recruiters in the area were quick to dismiss the suggestion that there were enough local jobs to go around, or that many would offer the same pay, while converting the old Honda factory is expected to take a decade.
None of this is to doubt the benefits of decarbonising the planet, but the Government and big companies need to be more honest about the costs of net zero, because they are likely to be astronomical, and to be born disproportionately by the sort of blue-collar workers that Ford employs across the world. So in that sense, its frankness is something of a breath of fresh air.