The Italian automotive industry now faces a considerable challenge: discontinuing the sale of cars with endothermic engines, the kind that run on diesel or petrol, by 2035 and switching to electric cars. As the European Commission points out, this green transition aims to significantly reduce the level of CO2 in the environment. This will require transforming the electric motor into a mature technology capable of offering the same autonomy and performance guarantees as endothermic engines. This complex change will also force changes on the labour market front.
State of the Italian supply chain
“This is a revolution for the automotive industry, yet I call it planned“, comments Marco Taisch, Professor of Digital Manufacturing, Sustainable Manufacturing and Operations Management at the Polytechnic University of Milan and automotive market expert. “In fact, there is enough time to be able to do it without haste and it does not catch us unprepared because the technological aspects of electric cars are already at an advanced stage of development, albeit with the limitations we all know. The green transition is also a political decision, and not just for the automotive industry, but industry in general”.
However, the labour market in the automotive sector is shaken by this transformation, which is also affected by the shortage of microchips and rising raw material prices. Not to mention two pandemic years, which saw sales plummet.
An electric car is a much simpler vehicle in terms of the amount of mechanical components required. This is bound to create major problems in Italy, where many companies are active in the components sector.
Marco Taisch, Professor of Digital Manufacturing, Sustainable Manufacturing and Operations Management at the Polytechnic University of Milan
Several companies in the sector have already announced staff cuts: Bosch announced 700 redundancies at the Bari plant and Marelli told the unions that 550 employees were at risk. The risks also involve many small and medium-sized companies working with components and forming part of the automotive supply chain.
The Italian Automotive Industry Association (ANFIA) claims that Italy risks forfeiting roughly 73,000 jobs between now and 2040, and already 67,000 in the 2025–2030 period. The Ministry of Economic Development has mapped the Italian component supply chain, highlighting how there are as many as 101 companies at risk.
“When compared with a conventional car”, Taisch explains, “an electric car is a much simpler vehicle in terms of the amount of mechanical components required. This is bound to create major problems in Italy, where many companies are active in the components sector. And the discussion encompasses regions and districts throughout the entire country. There will therefore be a need to reconsider new skills for many workers“.
The engine provides a simple example. From a mechanical point of view, the electrical one is much less rich in elements: it has no clutch, gearbox or lubrication systems.
The Draghi government recently formed a fund with resources of 1 billion a year for eight years, with incentives for staff training.
An alternative way to cushion the effects on employment is to guide workers towards other manufacturing sectors. A real opportunity especially for less specialised automotive resources, but here a key factor comes into play, namely the size of the automotive market, as Taisch reminds us. “Given the massive number of jobs globally, the automotive sector is one of the world’s biggest employers, which makes worker redeployment quite complex“, explains the professor. “Anytime it undergoes a change, all the others are affected. It is thus no mere fluke that governments stimulate the automotive industry when they seek to revitalise economic activity: since it tends to bear the greatest impact”.
The Italian industrial fabric comprises extremely specialised industrial districts, rich in skills and with a very strong link to the local territory. Consequently, a crisis affecting a sector in an active district will also engulf its entire geographical area, often as large as a province, which is very complex and requires the intervention of several administrative levels.
Some extremely one-dimensional districts, typical in some parts of southern Italy, will have more difficulty in converting.
Taisch gives a few examples. “Emilia-Romagna is highly diversified industrially and will therefore face fewer difficulties in making the transition, although it is very focused on the automotive industry to the extent that commercially the term Motor Valley is increasingly used. In contrast, some extremely one-dimensional districts, typical in some parts of southern Italy, will have more difficulty in converting”.
It will be crucial for Italy to focus on training and digitisation of both skills and businesses in the coming years. “Italy’s National Recovery and Resilience Plan is an excellent instrument, though it engages a time horizon that is much shorter than the automotive industry’s horizon”, explains Taisch. “However, the state can leverage industrial research so that the costs of research and development can be passed on: not least because Italy is one of the countries with the lowest research spending in Europe. This would benefit companies, rendering them more dynamic, and also workers, who would broaden their knowledge base. A well-defined industrial policy is also necessary”.
The green transition towards a zero-emission future affords many opportunities. In short, we must learn how to grasp them. According to the McKinsey report ‘The net-zero transition: What it would cost, what it could bring‘, which analyses the magnitude of the economic changes needed to reach the net-zero emissions target, a global green conversion could create a positive balance of 15 million new jobs by 2050, if successfully managed.