Media reports Volkswagen planning great cutbacks in Germany
Date
9/18/2024 8:43:13 AM
(MENAFN) Volkswagen (VW) is reportedly preparing for significant cutbacks in Germany, which may include the closure of at least two factories and the elimination of job security programs as part of a broader cost-saving initiative. This decision comes as the automotive giant grapples with a challenging economic landscape and declining competitiveness within the German economy.
Oliver Blume, the CEO of the Volkswagen Group, acknowledged the "difficult economic environment" as a critical factor influencing this strategy. In a statement, Thomas Schaefer, head of the VW brand, emphasized that the current situation is "extremely tense" and cannot be resolved through simple cost-cutting measures alone.
To achieve their goal of generating EUR10 billion (approximately USD11.07 billion) in savings by 2026, VW's management has determined that terminating job security schemes is necessary. However, any such measures will require discussions with the Works Council, a significant trade union that has already expressed its intent to resist these plans vigorously.
The Works Council has indicated that VW has identified one major vehicle manufacturing plant and one component factory in Germany as obsolete. The IG Metall trade union criticized the company’s intentions, labeling the announcement as "irresponsible" and warning that it undermines the foundations of Germany's largest industrial employer.
Daniella Cavallo, head of the Works Council, pointed out that VW's management has made "many wrong decisions" in recent years, particularly regarding investments in hybrid technology and the development of affordable electric vehicles. She has voiced concerns about what she termed VW’s "documentation madness" and "salami-slicing tactics," advocating instead for a strategy focused on reducing complexity and leveraging brand synergies.
As Volkswagen navigates this challenging period, the implications of these decisions will be felt not only within the company but also across the broader automotive industry and the German economy as a whole. The outcome of negotiations with the Works Council and the future of VW's operations in Germany will be closely watched by stakeholders and industry observers alike.
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