General Motors Corp. (GM) announced today it will embark on a sweeping program of salaried headcount reductions, but experts said the reductions are hardly a death knell for the automotive engineering profession in the U.S.
The announcement, made this morning by GM chairman Rick Wagoner, outlined a series of corporate changes that could have a $15 billion cumulative impact on GM’s cash in 2009. Among those changes was a plan for salaried headcount reductions that will be achieved through normal attrition, early retirements and “mutual separation programs.”
Wagoner emphasized the plan does not rely on forced layoffs. “I suspect the vast majority of the reductions will be accomplished through initiatives that do not require involuntary action,” he said.
Even as GM carries out its grand plan, however, experts said today the headcount reductions are not indicative of any larger trend in workforce reductions across the U.S. auto industry.
“GM will be taking people out with buyouts even as they’re hiring new people,” said David Cole, director of the Center for Automotive Research (CAR).
Cole said GM’s move has more to do with the changing nature of the automotive industry than it does with American companies’ dwindling piece of the global automotive pie. Because of changes in the design process, the future focus will be on younger engineers with a different skill set.
“If you’re an engineer whose expertise is building physical prototypes, then the outlook might not be so good,” Cole said. “But if you’re in the forefront of working with math models, then you’re in a pretty good spot. There’s also going to be a huge demand for people who are capable in software and controls. Right now, GM is hiring like crazy in the embedded software area.”
Cole added GM’s headcount reduction will partially involve attrition from the aging Baby Boomers sector. But as those older engineers retire, jobs in other engineering areas will eventually open up, Cole said.
Moreover, Cole expects European and Asian automakers to snap up many U.S.-trained engineers because the birth rate in the U.S. is at least 50 percent higher than those of Germany and Japan.
“Germany and Japan will be putting facilities here because the human resources are available here,” Cole said.
Cole added engineers with experience in hybrid powertrains and electric motors will also have an edge in the future. His comments were in line with those of Wagoner, who said GM would “increase our powertrain spending for alternative propulsion and fuel economy technology and for small displacement engines.”
Today’s announcement, however, emphasized the fact that compensation for auto executives is dropping, at least at GM. The giant automaker said annual cash bonuses and long-term incentives will be eliminated for top-level executives. Wagoner, who according to Wikipedia makes a higher annual salary than the top nine Toyota executives combined, said the reductions represent a cash compensation drop of 75 percent to 84 percent for those officers.
Still, Cole said it isn’t bad news for up-and-coming automotive engineers. “If you’re a new engineer who’s at the forefront of technology,” he said, “then you’re still in a good position.”