Posted on 29 Oct 2024
German automaker Volkswagen (VW) is planning to close at least three plants in Germany as part of cost-cutting measures, according to Volkswagen works council chief Daniela Cavallo.
Volkswagen said last month it was considering closing factories in Germany amid fierce competition and falling electric vehicle (EV) sales – a move severely criticised by labour unions. As such, the company has been negotiating with unions for weeks for a new labour agreement.
On Monday, Cavallo told employees at a meeting at Volkswagen’s Wolfsburg headquarters that the automaker plans to cut “tens of thousands” of jobs and slash pay by 10%. She added that all VW plants in Germany will be affected, with the management planning cuts at other sites.
"The board is also planning to downsize all remaining plants in Germany," Cavallo said, according to a statement seen by Kallanish. "In concrete terms, this means taking out even more products, volumes, shifts and entire assembly lines far beyond to what we have already done."
She emphasised: "All German VW plants are affected by this. None of them are safe!"
The works council head, however, did not specify which plants would be shut. The company currently has ten plants in Germany, employing a total of 120,000 workers.
In a statement on Monday, Volkswagen reiterated the “urgent need for comprehensive restructuring measures” to make the company “sustainably competitive”.
“We have to get to the root of the problems: we are not productive enough at our German sites and our factory costs are currently 25% to 50% above target,” explains Volkswagen Passenger Cars chief executive Thomas Schäfer. As a result, some of the company’s German plants are twice as expensive as its competitors, particularly due to high labour costs.
“In addition, we at Volkswagen are still handling many tasks internally that our competitors have already outsourced to reduce costs,” Schäfer adds. “This means that we cannot continue as before. We have to promptly find a joint and viable solution for the future of our company.”
Cavallo also called on the German government to come up with a “master plan” to support the German industry. "They [politicians] need to wake up," she added. "It is not enough just to say that they stand by the VW workforce. We need action! We need a comprehensive plan from politicians on how to finally get BEV [battery electric vehicle] mobility flying."
While German economy minister and vice-chancellor Robert Habeck said last month the government was mulling ways to support the struggling carmaker, he noted that “a large part of the tasks have to be dealt with by Volkswagen itself”.
European carmakers have been struggling amid high production costs, severe competition, and stagnating EV demand in major EV markets. Last month, Volkswagen lowered its 2024 outlook, citing a "challenging market environment and developments that have fallen short of original expectations." If the plant closures go ahead, it would mark a first in Volkswagen’s 87-year history.
Volkswagen's first round of negotiations with unions on 25 September ended after three hours. A second round of negotiations is set to take place on Wednesday. The period to refrain from industrial action will end on 30 November.
Source:Kallanish
