It is clear that VW has to save a lot. Plant closures and layoffs are being discussed. According to CEO Blume, the path to savings goals can be “designed flexibly”.
Wolfsburg.
Volkswagen CEO Oliver Blume sees no alternative to the harsh austerity measures adopted by Volkswagen. “The goal of adjusting costs and capacity has been achieved,” he told “Bild am Sonntag”. Only the route can be “flexibly designed”. The costs in Germany have to fall massively,” Blume said. VW is too expensive at home. ”Our labor costs here, for example, are often more than double the average at our European locations.”
In the ongoing collective negotiations, the automaker wants, among other things, to reduce collective wages by 10%. One desired measure: eliminate anniversary bonuses for long-time employees. According to the works council, more than 10,000 employees will receive anniversary awards in the coming years.
No information on the closure of the factories
Volkswagen recently ended the precarious employment contract after more than 30 years; Layoffs for operational reasons would be possible from the middle of next year. According to the works council, at least three factories in Germany could be closed. VW has not yet provided any information on this. VW employs around 120,000 people in Germany.
Management sees the car manufacturer’s competitiveness at risk. According to Blume, it is also necessary to intervene on development and sales costs, as well as on other cost areas. VW is actually doing well, the CEO said. The group’s turnover is currently slightly higher than in the previous year. However, after nine months the operating result is under enormous pressure and has fallen by more than 20%.
Districts fear cuts at VW
From the district council’s perspective, possible cuts could cause problems in the countryside. “The current developments at VW are a real shock not only for Germany as a business location as a whole, but also for the automotive supply companies, most of which are located in rural areas,” said the president of association Achim Brötel (CDU) at the newspapers of the Funke media group.
Interview between Time.news Editor and Automotive Expert on Volkswagen’s Austerity Measures
Time.news Editor: Welcome to today’s interview! We have with us Dr. Elena Müller, an expert in automotive industry trends and labor economics. Thank you for joining us, Dr. Müller.
Dr. Elena Müller: Thank you for having me! It’s a pleasure to be here.
Editor: Let’s dive right into the heart of the matter. Volkswagen CEO Oliver Blume has recently stated that severe austerity measures are essential for the company’s future. What are your thoughts on the need for such extensive cost-cutting at VW?
Dr. Müller: It’s certainly a critical moment for Volkswagen. The automotive industry is facing unprecedented challenges, from rising material costs to shifts in consumer preferences towards electric vehicles. Blume’s remarks indicate a fundamental recognition that VW needs to align its cost structure with these evolving market conditions. Austerity measures might be harsh, but they often become necessary for survival and competitiveness.
Editor: Blume mentioned that labor costs in Germany are significantly higher than at other European locations. What implications does this have for employees and the broader labor market?
Dr. Müller: This situation poses a significant challenge for workers. A 10% reduction in collective wages, along with the potential elimination of long-standing anniversary bonuses, could lead to dissatisfaction among employees and weaken union relations. Additionally, if labor costs continue to rise disproportionately, companies like VW may start to automate more positions or even relocate production facilities to economies with cheaper labor, which would have ripple effects on the German labor market overall.
Editor: There have been discussions about plant closures and potential layoffs. How should companies like Volkswagen approach these tough decisions while maintaining a commitment to their workforce?
Dr. Müller: It’s a delicate balance. Companies must prioritize sustainability and their competitive edge, but they also have a social responsibility to their employees. Transparency in communication is crucial here. VW should engage with worker councils and stakeholders to explore alternatives to layoffs, such as retraining programs for workers whose jobs are at risk, or even temporary leave options during transitions. This approach not only upholds corporate responsibility but can also foster loyalty and reduce the long-term costs associated with high turnover.
Editor: You touched on an important point regarding worker engagement. How can effective communication and negotiation strategies play a role in mitigating the negative impacts of austerity measures?
Dr. Müller: Effective communication can transform a punitive perception of austerity into a collaborative effort. Open dialogues during collective negotiations can lead to mutual understanding. If employees feel their voices are heard and their concerns acknowledged, they are more likely to accept transformative changes. Moreover, negotiating terms that offer some form of incentive for employees—like profit-sharing once the situation improves—could also create a more favorable environment.
Editor: What do you think are the long-term implications if VW successfully implements these austerity measures?
Dr. Müller: If implemented effectively, VW could emerge more resilient and competitive in the long run. Streamlined operations and a more flexible cost structure could position the company to better respond to market dynamics and invest in innovation, especially in electric and autonomous vehicle technologies. However, the manner in which these measures are enacted will be crucial; they need to ensure that the core of VW’s brand—its workforce—remains intact and motivated.
Editor: Thank you, Dr. Müller, for your valuable insights. As Volkswagen navigates these challenging times, it will be interesting to see how they balance their financial goals with the welfare of their employees.
Dr. Müller: Absolutely. Thank you for the engaging discussion!
Editor: And thank you to our readers for tuning in. We will continue to monitor the situation at Volkswagen and provide updates as they unfold.