"Volkswagen is
considering closing its factories in Germany because otherwise it cannot
withstand competition from other European and Chinese automakers, according to
Bloomberg and The Wall Street Journal.
VŽ has already
written that the Volkswagen group has announced that it will be necessary to
undertake a major restructuring in order to control the costs of factories,
labor and raw materials and to compete effectively with other car
manufacturers.
In Germany,
Volkswagen competes with already well-known rivals from Europe, Japan, the US
and South Korea, in addition to increasing market share from Chinese
automakers.
"The European
auto industry is in a difficult situation," said Oliver Blume, CEO of
Volkswagen, as quoted by The Wall Street Journal.
"Simple cost cutting
is no longer enough, we have to start thinking about closing factories."
Car market analyst
Haralds Hendriks, who gave an interview to Bloomberg, said that "Europe
has not won the battle" in the car manufacturing business.
According to the
expert, although car sales are still a fifth lower than they were before the
COVID-19 pandemic, major manufacturers such as Volkswagen, Stellantis or
Renault still operate around 30 factories in Europe.
According to H.
Hendriks, it was possible to see that it was unprofitable. In Wolfsburg,
Germany, Volkswagen has Europe's largest car factory.
According to an
analysis prepared by Bloomberg, in recent years, the United States has led the
way in car production and has been on the rise, with Japan also rising
slightly, while European production has been falling.
If Volkswagen
approves its plans, the concern will not avoid long negotiations with the
workers' trade unions.
The last such
negotiations were completed just last December, when a decision was found to
release part of the employees to early retirement.
"At stake is the
future viability of this country's industry and the corresponding domino
effect," Daniel Kavallo, president of the Volkswagen trade union (Works
Council), said in a letter to the works council. "We will not allow
Volkswagen to sell out of Germany as a place of business."
There is some truth
in the words of the workers' representative, because factories tend to employ a
lot of workers, so their closure causes ripples in various areas of the economy
in a given region.
Most likely, the
concern would first close the oldest factories, which cost the most to maintain
and pay the workers.
However, the head of
the car manufacturer says that there are no alternatives left.
"The economic
environment has become difficult, new players are entering Europe. Germany, as
a place of car production and a place of business activity, is losing in the
competitive battle," said O. Blume, CEO of Volkswagen."
commenting:
"This is what
happens when you close nuclear power plants and sanction your supplier of cheap
energy resources - Russia.
It's expensive to be
stupid, and when you're expensive, it's bad for the industry."
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