Volkswagen intends to close over 3 factories in Germany amid huge layoffs
Date
10/29/2024 5:39:29 AM
(MENAFN) Volkswagen announced on Monday that it plans to close at least three factories in Germany and downsize its remaining production plants in the country. Daniela Cavallo, chairwoman of the Volkswagen local Works Council and the Volkswagen Group, emphasized that the management's commitment to these measures is serious, indicating that it is not merely a bargaining tactic. She underscored the urgent need for the German government to devise a strategy to address the declining automotive industry in the country.
While details about the specific factories that will be shut down and the number of employees affected—out of approximately 300,000 in Germany—were not disclosed, the closures are part of a broader cost-cutting initiative. Volkswagen announced factory closures in September, marking the first time in the company's history that it has moved to terminate its longstanding employment protection plan five years ahead of schedule. The automaker cited high energy and labor costs in Europe as significant factors driving the decision, which have resulted in diminished competitiveness and falling sales.
This announcement has sent shockwaves through the German auto industry, where Volkswagen has been negotiating with unions for weeks regarding its restructuring and cost-cutting plans. Union leaders have cautioned the company against making what they termed a "historic mistake" by laying off workers, emphasizing the importance of retaining skilled labor during these challenging times.
Volkswagen employs around 650,000 people across 114 production facilities in Europe, Asia, Africa, and the Americas. As part of its broader savings strategy, the company aims to reduce personnel expenses by 20 percent by 2026, with a target of achieving savings of €10 billion (USD10.8 billion). The challenges facing the German automotive sector are compounded by inflation, rising energy costs, sluggish economic growth, the rise of far-right political sentiments, and increasing competition from Chinese manufacturers and Tesla, pressuring carmakers to cut costs amid low demand.
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