Volkswagen cannot rule out plant closures in Germany as it looks for ways to save several billion euros more in an ongoing cost-cutting drive at its namesake brand, the carmaker and its works council said on Monday.
The company believes a large vehicle factory and another component factory in Germany are outdated, according to the works council, which has promised “fierce resistance” to the board’s plans.
Volkswagen said it was also forced to end its workplace safety program, in place since 1994, adding that any measures would be discussed with the works council. The possible measures, targeting its main passenger car brand as well as other group operations, also include seeking to end the company’s pact with unions to keep jobs safe until 2029, the company said.
Any closures would mark the first in Germany during the company’s 87-year history, setting VW up for a showdown with powerful unions.
“The economic environment has become even more difficult and new players are entering Europe,” VW Chief Executive Oliver Blume said in a statement. “Germany as a business location is falling further and further behind in terms of competitiveness.” A full-blown labor dispute would be a major test for the chief executive, who also runs the Porsche sports car brand, after union clashes brought down several of his VW predecessors. The company has struggled to cut costs at its namesake passenger brand, where profit margins have long lagged, and efforts have become more difficult amid a stumbling transition to electric vehicles and a slowdown in consumer spending. Works council head Daniela Cavallo said VW’s management had failed after meetings detailed that the company’s core brand, which makes the Golf and Tiguan models, was threatening to turn a loss, according to a separate statement. The company is planning to close at least one larger car factory and a component plant in Germany, he said, as well as abolish wage agreements. VW employs about 650,000 workers worldwide, nearly 300,000 of whom are in Germany. Half of the seats on the company’s supervisory board are held by labor representatives, and the German state of Lower Saxony — which owns a 20 percent stake — often sides with union bodies. Previous clashes ended or shortened the terms of top executives including former Chief Executive Bernd Pischetsrieder, former VW brand chief Wolfgang Bernhard and Herbert Diess, Blume’s predecessor as chief executive. All three sought to drive efficiencies, particularly in VW’s domestic operations in Germany.
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