U.S. Suddenly Announced
October 25th news, General Motors of the United States announced on the 24th that it would lay off more than 200 people, mostly computer-aided design engineers, citing "business conditions"; the day before, Rivian had already laid off more than 600 people, accounting for 4.5% of the total number of employees.
The four words "business conditions" sound very official, but in reality, it's just a way for companies to "cut costs." However, the blade happens to fall on engineers, which is quite intriguing.
Let's first talk about how absurd this incident at General Motors is. The third-quarter financial report just released looks very bright, with revenue of $48.6 billion, higher than market expectations, and the stock price rose by 14% in one day, setting a five-year high. Chairman Mary Barra was proud to say that the market share was the highest since 2017, and the Chinese business has turned profitable again.
But the heat from the financial report hadn't even cooled down, and early in the morning, 200 or so engineers were fired through Slack messages, without even a face-to-face explanation. This isn't a case of poor "business conditions," it's clearly that they are making money and want to make more, treating engineers as tools for cost-cutting.
Looking at the annual data makes it clearer. In 2024, General Motors' revenue increased by 9.1%, but net profit dropped by 40.7%. Last year, it made $10.1 billion, but this year only $6 billion, with the net profit margin dropping from 5.9% to 3.2%. It seems that the profit didn't meet the expected level, so they cut the core technical personnel, which is really unsightly.
Rivian's layoffs seem to be forced, but still look pitiful. This new force in electric vehicles lost over $4.7 billion in 2024, and its annual free cash flow also decreased by over $3 billion, with their cash reserves decreasing rapidly.
More importantly, the federal electric vehicle tax credit is about to expire, and their affordable cars won't be available until 2026. Now, they rely on high-priced cars, and delivery targets keep being reduced. They can't afford to spend money without cutting staff.
But no matter how hard it is, you can't just cut engineers. These people are the core force in building electric vehicles. If you fire them, what will you rely on to turn around?
In fact, these two companies are not exceptions. The U.S. auto industry has already experienced a wave of layoffs, and the cuts have been mainly focused on technical positions.
This March, the parent company of Chrysler, Stellantis, directly laid off 400 technical workers in a phone meeting. Later, it was revealed that they had outsourced these jobs to low-cost countries like India and Mexico, while saying they wanted to "optimize the cost structure" and promote electrification.
General Motors had a round of layoffs in August, with more than a thousand people, mostly software engineers, citing the need to focus on electrification and autonomous driving. However, they later had to recall the Chevrolet Blazer electric SUV due to problems with their own in-car system, and the Cadillac Lyriq electric vehicle also had software issues.
In Europe, it's even worse. Renault laid off 3,000 people, Ford plans to lay off 1,000 people at its Cologne factory in Germany, and even parts giants like Bosch and ZF are cutting jobs.
Bosch plans to cut 13,000 positions by 2030, and ZF has already laid off 7,600 people. This is not an isolated problem for individual companies, but rather the entire industry is cutting into the engineering workforce.
Why are engineers specifically targeted? Simply put, the old ways of the automotive industry are no longer working, and the new path is also not smooth, so they are venting their frustration on the middle-level technical personnel.
For decades, American automakers have relied on internal combustion engines, holding a lot of patents for traditional vehicles, and employing many engineers who worked on traditional designs. Like the computer-aided design engineers General Motors just laid off, most of them were responsible for drawing parts diagrams and assembly designs for internal combustion engines.
However, the market has changed. In 2024, sales of new energy vehicles in the U.S. accounted for one-fifth, and internal combustion engine vehicles fell below 80% for the first time, reaching a new low. Automakers want to switch to electrification, but the design experience of internal combustion engines is of little use, so these engineers naturally become "excess people."
But transitioning to electrification is not as simple as it sounds. The battery costs of American automakers are 40% higher than those of their Chinese counterparts, which alone puts them at a disadvantage.
General Motors has invested a lot in electric vehicles. In the fourth quarter of 2024, the electric vehicle business achieved a variable profit turnaround, but the overall market share in the electric vehicle market was only 8.7%, far less than even a tenth of Tesla's. Even though Tesla's market share dropped from 55% to 49%, it still sits at the top.
Even more embarrassing is that they tried to gain market share through smart technology, but their software capabilities lagged behind. They hired a lot of software engineers, but messed up projects, and finally had to cut both people and projects, which is a waste of resources and human effort.
There's another reason that cannot be stated openly: engineers are valuable, and laying them off can save money the fastest. These technical personnel have been working for many years, and their salaries are much higher than ordinary workers. General Motors needs to cut costs by $2 billion a year, and Rivian needs to reduce losses. Cutting engineers is much more cost-effective than laying off production line workers.
Many of the laid-off engineers are veterans with more than ten years of experience. They haven't committed any mistakes, but they lost their jobs because of the four words "business conditions," becoming the "scapegoats" for corporate strategic failures.
To be honest, layoffs don't solve the problem; it's just a temporary solution. The root cause of the problems in the U.S. automotive industry lies in hesitation during transformation, high costs, and lagging technology. These issues can't be resolved by cutting a few engineers.
You see, Stellantis laid off 1,150 employees from the Belvidere plant last year, and this year they recalled 165 people to handle components. After all the back and forth, the core battery technology and software capabilities still haven't caught up.
Even if General Motors lays off 200 design engineers, if they can't lower battery costs, they can't sell electric vehicles against their competitors, and eventually they'll still be worried.
These automakers claim "business conditions," but they know better in their hearts. They aren't short of methods to save money, but lack the courage and ability to transform. The most innocent victims are the engineers, who spent their lives studying technology, only to become sacrifices in the industry's transformation.
This isn't "cost-cutting," it's clearly that the companies lack the ability, and they're targeting honest people. This approach may hold up for a while, but it won't last long. After all, the roots of enterprises are technology and talent. If you dig up the roots, how can they grow?
Original: www.toutiao.com/article/1846976377295114/
Statement: This article represents the views of the author.