Auto giant Volkswagen plans to close at least three factories in Germany and cut tens of thousands of jobs, the leader of the company’s works council told VW employees on Monday, prompting top executives to say VW needed to make changes to stay competitive.
All other VW factories in Germany will be downsized according to management’s plan, Daniela Cavallo said at an event in Wolfsburg, where VW is headquartered. Bosses also planned to implement an across-the-board pay cut, the works council leader said.
VW did not comment on possible plant closures or mass layoffs, but said “concrete proposals to reduce labor costs” would be presented during the upcoming collective bargaining.
Executives at the automaker argued that high costs at German factories necessitate deep cuts, but did not comment directly on reports of factory closures or mass layoffs.
“We cannot continue as before,” Thomas Schäfer, the CEO of the car brand Volkswagen, said in a statement on Monday. “We are not productive enough at our German sites and our factory costs are currently 25% to 50% higher than we planned. This means that individual German factories are twice as expensive as those of the competition.”
Cavallo and other union leaders at VW vowed fierce resistance to cuts.
The VW brand has been struggling with high costs for years and profits lag behind other subsidiaries of the VW Group, such as Škoda, SEAT and Audi.
Strikes coming?
Cavallo warned during her remarks before an outdoor meeting of about 25,000 VW employees: “I can only warn all board members and everyone at the top of the company – don’t mess with us, with the VW staff,” she said. said to applause.
The IG Metall union, which represents most of VW’s factory workers in Germany, also vowed to oppose any plant closures.
“This is a deep stab in the heart of the hardworking VW employees,” said Thorsten Gröger of IG Metall, district manager of the union in the western state of Lower Saxony, where VW is based.
“We want to secure locations, occupancy rates and employment in the long term. If management wants to herald the end of Germany, they should expect resistance they cannot imagine!” said Groger.
Uwe Kunstmann, head of the VW Saxony works council, which represents VW workers in eastern Germany, has already warned that the company is facing a “hot winter” of labor unrest.
If VW management’s position does not change, workers will walk out in nationwide strikes by December 1 and paralyze VW’s operations, he said.
VW CEO: ‘Situation is serious’
The Volkswagen Group has previously said the brand needs around 500,000 additional vehicle orders per year to fully utilize production capacity across all Volkswagen factories.
“Without comprehensive measures to regain competitiveness, we will not be able to afford significant investments in the future,” Gunnar Kilian, Volkswagen’s head of human resources, said in the management statement.
“The fact is that the situation is serious and the responsibility of the negotiating partners is enormous,” Kilian said.
Schäfer said Volkswagen’s goal remains to increase its return on sales to 6.5% by 2026, which he believes is the only way to finance necessary future investments.
German economy is faltering
Like other German automakers, VW invested heavily in the once booming Chinese market, but has recently faced stiff competition from upstart Chinese automakers. These Chinese rivals are now also penetrating the European market.
German carmakers have also faced challenges in the transition to electric vehicles, with high investment costs and disappointing sales.
But the crisis at Volkswagen, Europe’s largest carmaker, has also shaken Germany, amid broader fears of a loss of global competitiveness. The country’s economy has been slumping, and high energy costs and rising wages have raised concerns that the key manufacturing sector could face long-term decline.
The automotive industry is a pillar of the German economy and closely linked to the country’s image, while VW is one of its most iconic brands.
VW employs around 120,000 people in Germany, about half of whom work at the brand’s headquarters and main factory in the northern German city of Wolfsburg.
The VW brand operates a total of ten factories in Germany, six of which are in Lower Saxony, three in the eastern state of Saxony and one in the western state of Hesse.
In September, VW ended a long-standing labor security agreement with unions that had existed for more than three decades. Redundancies are now possible from mid-2025.
Volkswagen has never closed a factory in Germany, nor has it closed a factory anywhere in the world for more than thirty years.
Cavallo again called on Volkswagen bosses on Monday to present a vision of VW’s future rather than individual cost-cutting measures.
“With us, there will be no salami-slicing tactics. No partial solutions and no lazy compromises. We are looking for a total package,” she said. “Anything else won’t work for us!”
The VW factory in Osnabrück, which recently lost a hoped-for follow-up order from Porsche, is particularly at risk of closure, according to the works council. Porsche is also a subsidiary of the Volkswagen Group.
Cavallo said VW executives are also planning mass layoffs, putting entire departments at risk of being closed or moved abroad.
“All German VW factories are affected by these plans. None of them are safe,” Cavallo said.
Executives from VW’s parent company will meet labor negotiators from the IG Metall union on Wednesday for a second round of talks on a new collective bargaining agreement.
At a first meeting in September, Volkswagen flatly rejected IG Metall’s demands for a 7% pay increase and pushed for savings.
But Cavallo said on Monday that VW is now demanding a 10% pay cut and no other pay increases for the next two years.
Shortly after the works council announcement, the German government urged Volkswagen to protect jobs.
Chancellor Olaf Scholz believed that “possible false decisions made by management in the past should not be to the detriment of employees,” his spokesman said.
Volkswagen employees gather at the factory gate in Zwickau for an information event organized by the works council. Volkswagen plans to close at least three factories in Germany and cut tens of thousands of jobs, the leader of the company’s works council, Daniela Cavallo, told VW employees at an event on October 28. Hendrik Schmidt/dpa
Volkswagen employees gather at the factory gate in Zwickau for an information event organized by the works council. Volkswagen plans to close at least three factories in Germany and cut tens of thousands of jobs, the leader of the company’s works council, Daniela Cavallo, told VW employees at an event on October 28. Hendrik Schmidt/dpa
