Frankfurt (Germany) (AFP) – The boss of German carmaker Volkswagen warned workers on Tuesday to brace for thousands of job losses, with the crisis-hit company facing a drastic round of cost cutting. VW, long a titan of German industry, has struggled with Chinese competition, US tariffs, and patchy demand in Europe, including for its electric vehicles.
About 50,000 job cuts have already been agreed across the 10-brand Volkswagen Group — mostly at VW, Audi, and Porsche — but the firm has said another 50,000 could be required worldwide to slash costs. Speaking in front of about 10,000 workers at VW’s Wolfsburg factory, CEO Oliver Blume said it was likely that “about half of the adjustments required would fall in Germany.” He also cast doubt on the long-term future of three VW plants and an Audi factory, all in Germany.
“If we carried on in Germany as we have been, we would be at a permanent disadvantage to the tune of 1.5 billion euros ($1.75 billion) a year,” he said, stressing that “we are under real pressure to act.” Unions have accused VW of not being straight with workers after the latest plans were first reported in the media and only later communicated internally. VW Works Council head Daniela Cavallo accused management of keeping workers in the dark in a Volkswagen intranet post.
“Relevant information” on how the cuts would fall “was unfortunately still lacking,” she said, saying Blume had “missed his chance to explain things how they are.” IG Metall union leader Christiane Benner, in a radio interview, acknowledged the difficulties brought by China and US tariffs but advocated cost-cutting measures other than job cuts.
Collapsing sales in China have started to look less like a blip for VW and more like the new normal, at the same time as Chinese competitors like Chery and BYD gain market share in Europe. Other carmakers have warned that German auto plants need to learn to do more with less as pressure has risen. BMW opened a new plant in Hungary last year, where costs are lower, and Mercedes-Benz unveiled an extension to its Hungarian Kecskemet plant last month, making it the firm’s largest in Europe.
Mercedes-Benz has a cost gap of about 70 percent between its Hungarian and German operations, CEO Ola Kaellenius said last month. Any cuts at Volkswagen have to be negotiated rather than imposed, setting up protracted and difficult talks. Labour representatives have half the seats on supervisory boards at big companies under Germany’s system of co-determination. The German state of Lower Saxony — a shareholder that is home to several VW plants including the Wolfsburg factory — also holds seats on the board.
© 2024 AFP
