2024-09-03 18:01:34
Volkswagen had actually given its employees an employment guarantee until 2029. The board of directors has now withdrawn this guarantee.
As part of the cost-cutting program at its core brand VW, Volkswagen is no longer ruling out plant closures and redundancies in Germany. As the company announced after a management meeting, it is also ending the previously applicable job security, which ruled out redundancies until 2029.
From the board’s point of view, the brands within Volkswagen AG must be comprehensively restructured, it said. “In the current situation, plant closures at vehicle production and component locations can no longer be ruled out without rapid countermeasures.” In addition, the previously planned job cuts through partial retirement and severance payments are no longer sufficient to achieve the targeted savings targets.
“From the company’s perspective, restructuring based solely on demographic trends is not sufficient to achieve the structural adjustments required in the short term to increase competitiveness,” the statement said. “Against this background, the company sees itself forced to terminate the job security that has been in place since 1994.”
The works council chairwoman Daniela Cavallo announced massive resistance. The plans are “an attack on our employment, locations and collective agreements,” she explained in a special edition of the works council newspaper “Mitbestimmen,” which the German Press Agency has obtained. “This puts VW itself and the heart of the group at risk. We will fight bitterly against this,” said Cavallo. “With me, there will be no VW location closures!” The employee representatives, together with the state of Lower Saxony, have a majority on the supervisory board at VW.
In order to achieve the targeted improvements in earnings, costs would have to be reduced more than previously planned. According to Handelsblatt, up to four billion euros in additional savings would have to be made. “The headwind has become significantly stronger,” said brand boss Thomas Schäfer, according to the statement. “We therefore have to step up our efforts and create the conditions for long-term success.”
CEO Oliver Blume justified the course with the worsening situation. “The European automotive industry is in a very demanding and serious situation. The economic environment has become even more difficult, new suppliers are pushing into Europe,” he said in a statement. “In addition, Germany in particular is falling further behind in terms of competitiveness. In this environment, we as a company must now act consistently.”
The core brand Volkswagen has been struggling with high costs for years and its profitability is far behind that of sister companies such as Skoda, Seat and Audi. A savings program launched in 2023 should bring about a turnaround here, improving earnings by ten billion euros by 2026. However, the current weak new business has now further exacerbated the situation.