Volkswagen considers historic German factory closures
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The news: Volkswagen is considering the unprecedented closure of a vehicle plant and a component factory in Germany as part of a cost-cutting initiative.
The context: The move would be the first German factory closure in the company’s history and would involve abandoning a pledge not to cut jobs before 2029.
The numbers: Daniela Cavallo, chair of VW’s work council, which is elected to represent workers interests and sits on the company’s supervisory board, told employees in a note that last year’s cost-cutting program had fallen short by several billion euros, pushing its flagship brand into the red, the FT reported.
“As a result, the executive board is now questioning German plants, the VW in-house collective wage agreements and the job security programme running until the end of 2029,” Cavallo said.
Shares in Volkswagen, which had flagged plans to save €10 billion by 2026, rose 1.7%. Analysts have identified the Osnabrück and Dresden plants as potential closure targets, according to Reuters.
What they said: Group CEO Oliver Blume said the European automotive industry was “in a very demanding and serious situation.” He said the economic environment had deteriorated and highlighted the pressure Volkswagen is facing from competitors entering the European market.
“Germany in particular as a manufacturing location is falling further behind in terms of competitiveness. In this environment, we as a company must now act decisively,” he said.
The company will discuss the plans with the work council later this week. The council, backed by the powerful IG Metall union, has vowed "fierce resistance" to the plan.
The sources: The New York Times, Reuters
