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Wolfsburg. Volkswagen is no longer ruling out plant closures and compulsory redundancies as part of the cost-cutting program at the core VW brand. As the company announced after a management meeting, it is also terminating the previously applicable job security agreement, which ruled out compulsory redundancies until 2029.
The Board of Management believes that the brands within Volkswagen AG must be comprehensively restructured, it said. "Even plant closures of vehicle production and component locations can no longer be ruled out in the current situation without rapid countermeasures." In addition, the planned job cuts through partial retirement and severance payments are no longer sufficient to achieve the targeted savings.
"In the company's view, restructuring solely in line with demographic trends is not sufficient to achieve the structural adjustments required in the short term to increase competitiveness," the press release stated. "Against this backdrop, the company feels compelled to terminate the job security agreement that has been in place since 1994."
Works council mobilizes against plans
The head of the works council, Daniela Cavallo, announced massive resistance. The plans are "an attack on our employment, locations and collective agreements", she explained in a special edition of the works council newspaper "Mitbestimmen", which was obtained by the German Press Agency. "This puts VW itself and therefore the heart of the Group in question. We will fiercely defend ourselves against this," said Cavallo. "With me, there will be no VW site closures!" Together with the state of Lower Saxony, the employee representatives have a majority on VW's Supervisory Board.
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Group CEO Oliver Blume justified the course with the worsening situation. "The European automotive industry is in a very challenging and serious situation. The economic environment has become even tougher and new suppliers are pushing into Europe," he said according to the press release. "In addition, Germany in particular is falling further behind in terms of competitiveness. In this environment, we as a company must now act consistently."
Core brand has been a problem child for years
The core Volkswagen brand has been struggling with high costs for years and lags far behind Group companies such as Skoda, Seat and Audi in terms of returns. A cost-cutting program launched in 2023 was supposed to turn this around and improve earnings by ten billion euros by 2026. However, the current weak new business has now further exacerbated the situation.
In order to still achieve the targeted improvements in earnings, costs would now have to be reduced more than previously planned. According to the Handelsblatt, up to an additional four billion euros will have to be saved. "The headwind has become much stronger," said brand boss Thomas Schäfer according to the press release. "We therefore need to step up our efforts and create the conditions for long-term success."
Works meeting at the Zwickau plant
When asked, Volkswagen Saxony said that a works meeting had been arranged at short notice this week at the Zwickau plant, which Schäfer is also expected to attend. When asked about the future of the Transparent Factory in Dresden and whether it could be affected by a closure, Wolfsburg said that there was no list of locations that were to be closed. Today's statements are intended to open the door to decisions that could be possible in the future and that have always been ruled out in the past, such as the termination of job security.
In the VW Group, the future of locations is decided anyway by the so-called "planning round", which always takes place at the end of the year and is one of the most important events in the Group.
Nevertheless, the message from Wolfsburg has "alarmed and greatly affected" the officials in the Saxon Ministry of Economic Affairs. The Free State stands by all Saxon locations and firmly supports its colleagues in Zwickau, Chemnitz and Dresden, it said. "Saxony also supports calls to reintroduce a sales premium for electric vehicles," emphasized Minister of Economic Affairs Martin Dulig (SPD). (dpa/SZ/nm)
