Automation, digitalization and decarbonization in the European automotive sector

Publication Type:

Conference Paper


Gerpisa colloquium, Brussels (2023)


Technological innovation and decarbonization processes are changing value chains’ composition and companies’ organization, having deep consequences on the labour market. The duality of employment effects of technical change exerting both job creation and job destruction has been at the centre of the debate for decades, especially as a consequence of accelerated automation and introduction of Industry 4.0 at factory level. Digitalised productive processes have also allowed to increase the speed of globalization and relocation abroad of productive activities.

While the post-1990 phase has been defined as the hyper-globalization phase, the 2008 converted into a turning point for international exchanges, with the Trade Collapse, then followed by the rise of protectionism in the Trump term. The arrival of the pandemic and the restructuring of GVCs nowadays hugely impacted by the Zero-Covid strategy implemented in China have furthermore put pressure on the international division of labour and ensuing production to such an extent that nowadays there are commentators putting forward the notion of slowbalization. The extent to which globalization turned into an halt is not a matter of our analysis, but certainly new strategies to reduce the number of stages and to relocate production processes towards the most profitable/less costly proximity of lead firms are currently under the spotlight of MNCs (multinational corporations). The just-in-time model has gradually been reconsidered in light of the pandemic, with a just-in-case new approach.

As a consequence of the globalization processes, there is evidence of relocation of labour intensive processes towards low-cost countries, with specific concentration into low- and medium-value added phases. Relatively less skilled labour, paid at low-wages and employed in standardised production processes and with low technological upgrading has been required in the destination or peripheral countries. At the opposite, core, innovative productions remain in leading plants in high-wage countries where high-skilled labour is available to meet the digitalization and automation challenges. Indeed, there is high asymmetry across lead and peripheral plants and countries, with respect to R&D expenses and innovative efforts with consequent effects on upgrading of production activities and skills to meet techno- logical challenges. Globalization and GVCs have to be considered in order to analyse the automotive sector with a European lens, being the sector strongly stratified into a core- periphery structure characterised by the central-continental lead area, decreasing number of employees and strategically maintaining only some specific segments versus the peripheral Visegrad area.

The effects on the reorganization of industries and employment of the decarbonization pro- cess are less straightforward, since, at this stage, it has not been as disruptive as automation and, despite the urgency to face climate emergency, policies and actions are moving at a slow pace. As for automation and the digital transition, the climate transition is expected to have heterogeneous effects with respect to sectors and countries, particularly in their capability to address the decarbonization process, according to regulations, corporate strategies and globalization process effects. Decarbonization of internal combustion engine and the shift toward electric vehicles will fast reconfiguring the geography of European production, putting under stress the second and third tier suppliers characterised by SMEs located into the East and South of the EU.

In what follows, we will focus on the digitalization, automation and decarbonization trends in the automotive industry. The automotive sector can be considered as a benchmark ex- ample for the whole metal sector, considered for instance that automation of mechanical processing of metal parts and the deployment of CAD for prototyping are used both for automotive and other products of the metal industries. At the same time, the automotive sector is an archetypical example of the shortcomings of the decarbonization process, especially about the uncertainty of its employment effects, but also one of the most targeted by European regulations in terms of emissions, with ban of producing internal combustion engine vehicles from 2035.

To understand trends of digitalization, automation and decarbonization and their current manifestation in the European automotive industry, we outline the relevance of the following factors:

  • The role of European geography of production and distribution chains: differentiated impacts for the North vs the South; for the East vs the West, for focal/lead/core plants vs peripheral ones; 

  • The role of managerial strategies of the companies, in relation to globalization processes as well; 

  • The role of trade unions and space of actions mediated by the institutional settings, from national, to sectoral, to plant level bargaining. Clear need to embrace a systematic understanding of heterogeneous trade union configurations across EU countries;
  • The role of national, European and international regulations which speed up or hamper the transition.

This position paper is aimed to outline the characteristics of the trends at stake to argue the rationale behind the study and case-selection strategy. We first describe the automation and digitalization processes in the automotive sector and their effects on employment, developing the aforementioned aspects, common to the decarbonization process. Possible scenarios are analysed, providing for actual cases of electrification conversion of some European plants of the key OEMs companies as practical examples to better understand the employment effects. The analysis draws upon the extant literature, while synoptic tables and graphs are provided. 

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