Executives at German carmaker Volkswagen on Monday defended major cost-cutting plans but did not immediately comment on reports that the company would cut tens of thousands of jobs.
The CEO of car brand Volkswagen, Thomas Schäfer, said in a statement that costs at factories in Germany have become particularly high.
“We cannot continue as before,” Schäfer said. “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.”
The statement was released shortly after the head of the VW works council, Daniela Cavallo, said the carmaker plans to close at least three factories in Germany and downsize all others.
Cavallo also said VW is demanding across-the-board pay cuts for its German workers in ongoing collective bargaining.
“Without comprehensive measures to regain competitiveness, we will not be able to afford significant investments in the future,” Volkswagen Chief Human Resources Officer Gunnar Kilian said in the statement.
Kilian did not directly address these claims or provide details on any specific cost-cutting measures the automaker is considering.
“The fact is that the situation is serious and the responsibility of the negotiating partners is enormous,” Kilian said.
“We adhere to the principle agreed with employee participation that the discussion about the future of Volkswagen AG must first be conducted internally with our negotiating partners,” he added.
Volkswagen announced “concrete proposals to reduce labor costs” on Wednesday ahead of planned collective bargaining talks with union leaders.
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.
