Volkswagen, facing challenges from high manufacturing costs, fierce global competition, and declining demand in key electric vehicle markets, has announced plans to shutter three of its factories in Germany.
Daniela Cavallo, the Chief of the Volkswagen Factory Council, disclosed during a meeting held at the company's Wolfsburg headquarters that the board of directors has approved a strategic plan involving a 10% reduction in wages and the dismissal of tens of thousands of employees. This restructuring will result in significant downsizing across all German operations, including the elimination of certain products, production shifts, and assembly lines.
The ongoing crisis has significantly impacted the entire European automobile industry, including all Volkswagen factories in Germany. Contrary to claims suggesting that no facilities are impacted, Volkswagen Factory Council Chief Daniela Cavallo has stressed that every plant is at risk. Cavallo also urged the German government to formulate a comprehensive support strategy to facilitate the transition to Battery Electric Vehicle (BEV) mobility, underlining the critical need for an industry support master plan.
Thomas Schäfer, Chief Executive of Volkswagen Passenger Cars, echoed this urgency by calling for a cohesive and practical plan to secure the company's future. He stated, "We must address the core issues: our productivity at German sites is insufficient, and our factory costs currently exceed targets by 25% to 50%."
Germany's Vice-Chancellor and Minister of Economics, Robert Habeck, announced that the government is exploring support measures for the struggling automotive industry, emphasizing Volkswagen's crucial role in its recovery.
Volkswagen's recent factory closures have prompted strong opposition from labor unions, leading to ongoing negotiations for a new collective bargaining agreement. The initial negotiation on September 25th proved inconclusive. A second meeting is planned for Wednesday, with the current ban on industrial action expiring on November 30th.
The planned restructuring within the automotive sector carries substantial implications for both employees and the industry's future.
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