German multinational car giant Volkswagen has announced dramatic austerity measures as the company struggles with declining sales and revenue.
For the first time in its history, on October 28 VW said it would close factories. According to the company’s Works Council, the loss of tens of thousands of jobs is now imminent. Wages will be cut and will not increase for the next two years.
VW leadership informed employees that three factories would close down and all remaining locations would be reduced in size.
Unions have said they would target plants nationwide from December, threatening a “hot winter”.
Entire departments are set to be closed or relocated abroad. The outsourcing plans will affect semi-skilled workers as well as research and development activities.
Group Works Council head Daniela Cavallo warned at an information event for employees in Wolfsburg on October 28: “All German VW plants are affected by these plans. None is safe!
“It is the firm intention to bleed the regions where the plants are located and the clear intention to send tens of thousands of Volkswagen employees into mass unemployment,” she claimed.
For Volkswagen workers who remain, there will be salary cuts of 10 per cent and no increase for 24 months at least.
Additionally, the current €167 monthly collectively-agreed bonus per employee will be terminated.
In total, this means a pay cut of around 18 per cent.
Employees below management level will no longer get any bonuses. At the same time, one-off anniversary payments for 25 and 35 years of service will not now available.
A job security programme that had been in effect for more than 30 years was terminated by the VW board of management in September. Mandatory redundancies could begin in the middle of next year, newspaper Bild reported at the time.
Regarding the latest announcement, Cavallo said the company’s management board had simply “set fire to everything for the staff here … and then left”.
The next meeting between the management board and the union has been scheduled for October 30, designed to reach a wage agreement – but few believe it will be productive.
While the company leadership said it wanted to implement the 10 per cent pay cut, the Works Council has been demanding a 7 per cent pay rise.
“These ruthless plans of the board are in no way acceptable and a break with everything we have experienced in the company in recent decades,” said Union IG Metall district manager Thorsten Gröger, adding the plans would not be accepted.
Around half of the 120,000 German VW workforce is employed in Wolfsburg.
A likely candidate for closure is the Osnabrück plant, which recently lost an order with Porsche. Around to 2,300 people work at the facility.
The electric-car factory in Zwickau, Saxony, which employs more than 10,000 people, is said to be set to lose one of its two production lines.
There, thousands of employees marched to the factory gates on October 28 with whistles, rattles and red alarm clocks and vented their displeasure.
Volkswagen operates 10 plants in Germany, six of which are in Lower Saxony, three in Saxony and one in Hesse.
In a press release, the Works Council wrote of “historic dimensions” about which the company was keeping employees in the dark. They demanded an explanation from the board of managers and said they rejected a “one-sided austerity course”.
But the company defended the plans. “The fact is: The situation is serious and the responsibility of the negotiating partners is enormous,” stated Human Resources director Gunnar Kilian.
“Without comprehensive measures to regain competitiveness, we will not be able to afford significant investments in the future.”
Kilian announced “concrete proposals to reduce labour costs” in the next meeting between unions and management.
CEO of Volkswagen Passenger Cars Thomas Schäfer stressed the high costs of production in Germany.
“We are not productive enough at the German sites and are currently 25 to 50 percent higher than we have planned in terms of factory costs. This means that individual German plants are twice as expensive as the competition,” he said.
The Volkswagen Group said in a statement it was at a “decisive point in its corporate history”, adding the situation was “serious”.
Chancellor Olaf Scholz said that “possible wrong management decisions from the past must not be at the expense of employees”.
Deputy government spokesman Wolfgang Büchner stressed the focus should instead lie on “preserving and securing jobs”.
Lower Saxony’s opposition leader Sebastian Lechner called on the State government to prevent Volkswagen plant closures there.
“The situation of the Volkswagen Group is shocking,” said the Christian Democratic Union politician.
The State of Lower Saxony owns 20 per cent of Volkswagen and its supervisory board is composed of culture minister Julia Willie Hamburg (Greens) and Stephan Weil (Social Democratic Party).
The parliamentary group leader of the Greens in the State parliament, Anne Kura, said the company and the unions should work on preventing the plant closures and think instead about the employees in the region.
Socialist parliamentary group vice-chairman Verena Hubertz also warned against job cuts.
Alternative for Germany (AfD) co-leader Alice Weidel put the blame for the situation on the Greens’ policies.
On X she said: “Ordinary workers are paying the price for the ideologically driven transport turnaround of the CDU/CSU and the traffic-light coalition.
“They have driven Germany into the wall as a business location.”
