In a historic move, Volkswagen is being forced to shut 3 factories in its home market, ending thousands of jobs.
In a move that is expected to significantly impact its workforce, German automotive giant Volkswagen (VW) has announced plans to shut down at least three of its plants in Germany. This decision confirms rumours circulating since September and comes as the company grapples with a sluggish economy and high production costs, leading to dwindling sales.
Daniela Cavallo, the head of Volkswagen’s works council, disclosed the company’s factory closure plans, stating that “Management is absolutely serious about all this. This is not saber-rattling in the collective bargaining round.” Cavallo further emphasized that “all German VW plants are affected by these plans” and that “none of them are safe.” That of course means even the prized ‘Transparent Factory’
According to the reports, Volkswagen’s management is also demanding a 10% pay cut and no other pay raises for the next two years, a move that has been met with fierce resistance from labour leaders at VW.
The reasons behind Volkswagen’s drastic restructuring measures are multifaceted. The company cited the European automobile market’s shrinkage by two million vehicles since 2020, with the market stagnating and not expected to recover in the foreseeable future. As Volkswagen holds a 25% share of this market, the company is short by approximately 500,000 cars, further exacerbating its financial woes.
Volkswagen’s CEO, Thomas Schäfer, acknowledged the high costs of the company’s plants in Germany, stating that they are “25% to 50% higher than we had planned” and that “individual German plants are twice as expensive as the competition.” This stark admission underscores the challenges Volkswagen faces in maintaining its competitiveness in the global automotive landscape.
The impending plant closures and job cuts have sparked outrage among the German government and the IG Metall trade union, which represents a significant portion of Volkswagen’s workforce. The IG Metall District Manager, Thorsten Gröger, described the news as “a deep stab in the heart of the hard-working VW workforce,” demanding that Volkswagen present “viable concepts for the future” instead of relying on “fantasies of cutbacks.”
The German government, through its spokesperson Wolfgang Büchner, has acknowledged Volkswagen’s challenges and expressed the desire to maintain and secure jobs, emphasizing that “possible wrong management decisions from the past must not be to the detriment of employees.”
Volkswagen’s decision to close plants and cut jobs in Germany is a significant blow to the country’s automotive industry, which has long been a cornerstone of its economy. The ripple effects of these changes are likely to be felt throughout the region, as the loss of these jobs will have a broader impact on the local communities and suppliers.
As Volkswagen navigates this challenging period, it will be crucial for the company to strike a balance between cost-cutting measures and ensuring the long-term sustainability of its operations in Germany. The company’s ability to find innovative solutions and maintain its competitiveness in the face of global market shifts and increasing competition from Chinese electric car manufacturers will be pivotal in determining its future success.
