Volkswagen Mulls Closing at Least Three German Plants
Ailing Volkswagen plans to close at least three factories in Germany, cull tens of thousands of jobs and slash salaries in a "historic" cost-cutting drive, staff representatives told workers in meetings across the country Monday.
Factory closures in home country Germany would be a first in the 87-year history of Volkswagen, which has been hit hard by rising competition, especially on electric cars, in key market China.
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Labour leaders have vowed to put up fierce resistance, setting the stage for what Bild newspaper called a "hot winter" of strike action at Volkswagen at a time when Europe's largest economy is already struggling through a downturn.
More than 25,000 workers gathered at the company's Wolfsburg headquarters to hear the details of management's plans to drastically reduce costs at the core VW brand. Thousands more attended information sessions at other plants.
According to Volkswagen's powerful works council, bosses were considering shuttering "at least three" German VW plants and downsizing the remaining ones.
They also intend to move "entire departments" abroad or outsource their work completely, the works council said in a statement after informing employees in all 10 German plants of the proposals.
The plan includes a 10-percent pay cut for all staff and no salary increases in 2025 or 2026, the statement added.
"Volkswagen is shocking its workforce" with cost-cutting plans "of historic dimensions", the works council said.
"This is the plan of Germany's largest industrial group to start the sell-off in its home country," Daniela Cavallo, head of the works council, told staff in Wolfsburg.
"It is a firm intention to bleed dry the regions where the plants are located," she said. "And it is the clear intention to send tens of thousands of Volkswagen employees into mass unemployment."
Berlin Warning
Volkswagen did not comment on the details of the savings plan but VW brand chief Thomas Schaefer said the company had to tackle "the root of the problem".
"We are not productive enough at our German locations," he said, noting that factory costs were currently "25 to 50 percent" above target.
"This means that individual German plants are twice as expensive as the competition."
The financial daily Handelsblatt earlier reported that VW was seeking around four billion euros ($6 billion CAD) in savings, including through plant closures, pay cuts and bonus reductions.
In Berlin, the government cautioned Volkswagen against a mass jobs cull.
Chancellor Olaf Scholz's position was that "possible wrong management decisions from the past must not be at the expense of the employees", spokesman Wolfgang Buechner said, adding that the focus should be on "preserving and securing jobs".
"Serious Problems"
The 10-brand Volkswagen group employs more than 680,000 people globally, with around 120,000 at the core VW brand in Germany.
Volkswagen stunned employees in September when it announced it was in need of a deep restructuring and was considering significant job cuts as well as shuttering plants on its home turf.
VW argues the cuts are necessary as it grapples with high manufacturing costs, a stuttering switch to electric vehicles and increased Chinese competition.
Rival carmakers in Germany's flagship auto industry are facing similar headwinds.
The works council acknowledged Monday that VW had "serious problems".
But staff representatives accuse VW's leaders of mismanaging the group and putting profits above building a sustainable future for the manufacturer.
Speaking in Wolfsburg, Cavallo said management still had no "plan for the future".
"There is still no plan of attack on the table, no concept for the future product pipeline and no idea of how we can regain our technological leadership," she said.
Tensions could "soon escalate", she said, hinting at potential strikes.
Uwe Kunstmann, from the VW works council in the eastern state of Saxony, told Bild that the first walkouts could start in December.
Volkswagen, which last month already cut its 2024 outlook, is due to publish third-quarter results on Wednesday that are expected to be lacklustre.
Also on Wednesday, Volkswagen will begin a second round of wage talks with the IG Metall union. The union has asked for a seven-percent pay rise, which Volkswagen bosses have rejected.
