2024-09-03 04:20:39
Volkswagen is in crisis – and facing a historic step: For the first time, a plant in Germany could be closed. t-online knows which one could be up for discussion.
It is a bombshell in Wolfsburg: Volkswagen is drastically tightening its austerity measures and is putting factories in Germany under scrutiny for the first time in its history. Without rapid countermeasures, it cannot be ruled out that car factories and component factories will be closed, the company announced internally on Monday. In addition to the main factory in Wolfsburg, VW has factories in Hanover, Emden, Osnabrück, Braunschweig, Salzgitter, Kassel, Zwickau, Dresden and Chemnitz.
In addition, the job security that has been in place since 1994 and runs until 2029 is to be terminated. t-online answers the most important questions about the crisis at the car manufacturer.
The employment guarantee in the VW Group actually excludes redundancies in Germany. This previously applied until 2029. But now the company is planning to terminate the agreement. For the VW works council, this is a red line that must not be crossed, they said.
The employment guarantee at Volkswagen has been in place since 1994. Volkswagen was already going through a serious crisis in the early 1990s and wanted to lay off 30,000 employees. At that time, the IG Metall union and the then VW boss Ferdinand Piëch agreed on a radical reduction in working hours by introducing a four-day week – and a simultaneous reduction in wages by ten percent.
The employment guarantee was also agreed at this time. Working hours were increased again a good ten years later, but the job guarantee still applies and has always been extended at the insistence of the works council.
Very low. According to the company, restructuring in line with demographic trends alone is not enough to increase competitiveness. CEO Oliver Blume justified the current course with the worsening situation. “The European automotive industry is in a very demanding and serious situation. The economic environment has worsened again,” he said, according to the statement.
In order to achieve the targeted earnings improvements of ten billion euros by 2026, costs would now have to be reduced more than previously planned. “The headwind has become significantly stronger,” said brand boss Thomas Schäfer, according to the statement. “We therefore have to step up our efforts now and create the conditions for long-term success.”
The core brand Volkswagen has been struggling with high costs for years and is far behind sister companies such as Skoda, Seat and Audi in terms of profitability. A savings program launched in 2023 should bring about a turnaround here, improving earnings by ten billion euros by 2026. Among other things, personnel costs in administration are to be reduced by 20 percent. To date, VW has relied on part-time retirement and severance payments to reduce staff; corresponding programs were expanded again in the spring and 900 million euros were set aside for severance payments of up to 474,000 euros for particularly long-serving employees.
According to “Handelsblatt”, up to four billion euros in additional savings are needed. The paper quotes an insider as saying that this is a savings package as comprehensive as “the likes of which VW has not seen for decades”.
Expert Jürgen Pieper, long-time Director of Research for the automotive industry at Bankhaus Metzler and now a freelance analyst, also told t-online: “The fact that VW is cancelling the employment guarantee shows how deep the company is in the crisis.” And he continued: “This is a unique step in the company’s history.” The crisis may not be existential, “but it is probably the biggest since the diesel scandal.”
Not unlikely. “With this current step, the company is preparing for redundancies and plant closures in Germany,” said expert Pieper. “This step has not yet been decided. But management now has free rein and can at least work with this option.” However, the Volkswagen works council has already announced clear resistance.
“Instead of unilaterally cutting costs at the expense of the workforce, we now need a strategic breakthrough with a boost for the actual construction sites: product, complexity, processes, synergies,” said works council chairwoman Daniela Cavallo. This is not an issue for the VW brand, but for the entire group.