Wolfsburg (Germany) (AFP) – German auto giant Volkswagen’s management meet Thursday to thrash out plans for what could be the biggest ever restructuring in the global auto industry, with unions set to protest any mass job cuts. Europe’s largest carmaker has come under intense pressure from US tariffs, slimmer profit margins from electric cars, and above all intense competition in China, the world’s largest auto market.
VW, whose 10 brands range from mass-market Seats to premium Porsches, is already in the process of axing 50,000 jobs in Germany by 2030, including 35,000 at its namesake marque. The cuts at the Volkswagen brand are part of a deal reached with unions at the end of 2024, which also ruled out plant closures in Germany until at least the end of the decade. But CEO Oliver Blume is now eyeing cutting 100,000 jobs worldwide, as well as the closure of three German VW plants and an Audi factory, weekly Manager Magazin reported, citing company sources.
“If these plans came to fruition, we would stop them with all our might,” Christiane Benner, head of the powerful IG Metall union, said in a joint statement with VW works council chief Daniela Cavallo. IG Metall is organising protests by VW workers outside plants across the country Thursday, when the carmaker’s bosses will present the restructuring plans to the supervisory board.
Ordinarily, the supervisory board’s 20 members are split evenly between worker and shareholder representatives. However, the workers’ side currently have a majority after Susanne Wiegand, former boss of defence group Renk, recently resigned. The 89-year-old group also has a complex ownership model that makes restructuring tricky, with Lower Saxony state—home to VW’s Wolfsburg headquarters and six plants—holding a substantial stake that gives it the power to block decisions.
No major announcement is expected immediately after the meeting, which is likely the start of a lengthy process of negotiation, several sources close to the matter told AFP. But if the plans are ultimately pushed through, then it would amount to a roughly 15-percent reduction in VW’s global workforce of some 630,000. This would eclipse all other major job-cutting drives in the auto industry, notably Detroit-based General Motors’s move to cut almost 50,000 jobs in 2009 as it declared bankruptcy.
The whole German auto industry—including VW’s peers BMW and Mercedes-Benz with their suppliers—has been struggling in recent years, with job cuts and overhauls increasingly common. While refusing to give details, a VW spokesman said the group needed to “improve its competitiveness” and apply “even more rigorous cost and investment discipline”. Blume has repeatedly said the situation is critical, telling shareholders earlier this year that the company needed to change or it would die.
“Our business model of past decades no longer works,” he said in a March letter, citing “regional market conditions, changes in trade policy, massive regulatory requirements in the various regions of the world and our high-cost position, above all in Europe”. Higher US tariffs on cars and auto parts introduced last year are expected to cost VW five billion euros ($5.7 billion) annually, with the situation particularly acute at Audi and Porsche, which have no US factories.
VW is also being elbowed out of China, with years of declining sales amid stiff local competition last year leaving the firm’s vehicle deliveries in the country at their lowest level since 2011. “The cars that are being sold in China, some of them are the world’s best,” Tu Le, founder of Sino Auto Insights, told AFP. “The fall for the German automakers has been really abrupt.”
Blume has floated the possibility of VW’s European plants making the company’s Chinese-designed cars to use up spare capacity and also said that production for defence contractors could be an option. “The Chinese are coming to Europe, also building factories which are highly efficient,” he warned in April. “We cannot compete with underutilised plants.”
© 2024 AFP
