VW Looks To Slash Jobs, Says Workers' Advocate

Volkswagen's works council said the auto giant aims to shut at least three factories in Germany, downsize its remaining plants and lay off tens of thousands of staff as part of a cost-cutting drive.

The warning Monday came after weeks of negotiations between Volkswagen and labor representatives who, as at many German companies, hold seats on the automaker's supervisory board.

In a speech at Volkswagen's main plant in Wolfsburg, Daniela Cavallo, head of the works council, said the auto giant also wants to cut workers' pay by 10% and freeze pay increases for the next two years.

Volkswagen declined to comment on Cavallo's speech, citing the confidentiality of its discussions with the works council and IG Metall union.

"The situation is serious, and the responsibility of the negotiating partners is enormous," the company said. Volkswagen added that its main task now is to secure its future and find ways to keep investing in its business on a sustainable basis.

Volkswagen is under pressure to cut costs in a tough economic environment, facing the need to invest in electric vehicles and increasing competition from Chinese EV makers in both China and Europe. The company recently slashed its sales and profit forecasts for the year, and last month warned that it was considering factory closures in Germany to boost its competitiveness.

Volkswagen's suggestion that it might have to shut a plant in Germany for the first time in its history has set up a battle with its powerful union, which has vowed to fight any factory closures.

The next collective-bargaining meeting between the company and its worker representatives is set to take place on Wednesday.

Cavallo warned that the works council may break off talks and "do what a workforce has to do when it fears for its existence."

Volkswagen executives have said that Germany is falling further behind in competitiveness as a manufacturing hub and that simple cost-cutting measures aren't enough to address the challenges the company faces.

"We are currently not making enough money from our cars," Thomas Schafer, head of Volkswagen Passenger Cars, said Monday. "At the same time, our costs for energy, materials and personnel have continued to rise."

Schafer said some of VW's plants in Germany were twice as expensive as those of competitors.

Meanwhile, Volkswagen still handles many tasks internally that rivals have outsourced to reduce costs, he added.

The country's carmakers, including VW and Mercedes, have fallen behind Tesla and Chinese companies in the transition to electric vehicles and have lost ground in crucial Asian markets to Chinese upstarts that have an edge on innovation.

Labor costs in Germany are the highest in Europe, according to an analysis by the German Association of the Automotive Industry, while energy costs in the country have risen since it lost access to cheap Russian gas as a result of the decision of chancellor Scholz to allow enormous sanctions on Russia from the Western countries." [1]

The Global South ignored the sanctions, so the sanctions are a failure, Russian economy is strong. Now VW and Mr. Scholz are failures too. High labor costs are OK, if Germans are making high quality, expensive, reasonably priced, luxury cars, like they did before Mr. Scholz failure.

 

1. VW Looks To Slash Jobs, Says Workers' Advocate. Chopping, Dominic.  Wall Street Journal, Eastern edition; New York, N.Y.. 29 Oct 2024: B.1.