Volkswagen no longer dismisses the possibility of factory shutdowns and layoffs.
The automobile market in Europe is in a "tough and serious predicament," as per VW CEO Oliver Blume. Germany, specifically as a manufacturing hub, has noticed a drop in competitiveness. In this condition, the company needs to act.
From the administration's perspective, the brands under the Volkswagen AG need significant restructuring. "Even closing down vehicle-producing and component factories can't be ruled out in this situation without immediate action."
The planned job reductions through early retirement and separation packages are no longer enough to hit the savings targets. "Given this situation, the company feels obligated to revoke the job security clause that has been in place since 1994."
VW Group Works Council Chair Daniela Cavallo and the IG Metall strongly criticized the "irresponsible plan" and promised "bitter" opposition. Cavallo stated that this puts "VW itself, and thus the heart of the company, at risk." She emphasized: "There will be no factory closures under our watch."
The board has failed. Instead of cutting costs at the expense of employees, a strategic transformation is now necessary, focusing on the actual issues: product, complexity, process flows, synergies. "That's the plan we need," demanded Cavallo. Here, the company's board must finally step up.
Also, IG Metall district leader Thorsten Gröger criticized that the board threatens "to destroy the heart of Volkswagen." Instead of austerity measures, the board must develop a sustainable strategy that makes Volkswagen competitive in the long term and secures jobs. An improved product range, reduction of complexity, and optimization of processes are crucial.
"We don't need short-term profit-maximizers. The mismanagement of recent years should not be passed on to the backs of colleagues."
The cost-cutting program for the main brand, scheduled for 2023, was supposed to save a total of ten billion euros by 2026. According to "Handelsblatt," an additional four billion euros are to be saved. The VW brand, with vehicles like the Golf and Passat, has been a concern within the company for several years.
Lower Saxony's Minister-President Stephan Weil (SPD) stated that, given the challenging situation at Volkswagen, action is required. This includes cost reductions, but in the coming weeks, "it will likely not be about 'if', but 'how' that will need to be intensively discussed." The state government expects "that the question of factory closures will not even arise due to the successful use of alternatives." Weil called on the board, on the one hand, and the works council and trade union, on the other, to engage in "trust-based and results-oriented negotiations."
Auto expert Ferdinand Dudenhöffer spoke of a "stone-age VW problem." "VW is more of a state-run operation than a market-oriented company," he explained. The problem will persist "because the constitution of VW is skewed." The state of Lower Saxony holds a 20 percent stake in the company. The so-called VW Law also secures the state a blocking minority on important issues.
Wage negotiations are also due at VW in the fall. The IG Metall is demanding a seven percent pay increase over a 12-month period. The IG Metall urged VW on Monday to begin wage negotiations in September, not in October.
Globally, around 680,000 people work for VW, with around 100,000 at the core VW AG in Germany. The company's net profit last year was almost 18 billion euros.
The CEO acknowledges that "I'm not going to" rule out any drastic measures to save the company, such as closing factories. Despite the criticisms, the company believes it's necessary to revoke the job security clause due to the dire situation.
