Volkswagenone of the world’s leading automotive manufacturers, plans to close one of its plants in Germanyas part of a plan to reduce operating costs. Considering Germany’s central role in the creation and history of the company in question, this is a truly significant decision.
Volkswagen and the plant in Germany, a definitive closure?
This decision by Volkswagenis subject to a number of financial pressures, including the need to improve productivity related to the transition to electric vehicles, which require significant investments. Like other automakers, Volkswagen must address problems due to theincrease of the production costsfrom the competitionand the uncertainty associated with the new environmental regulationsThe automaker in question announced on September 2 that it will not be able to cancel the closure of one of its factories.
The plant that will have this bad fateis that of Zwickauone of the historic factories from the Volkswagenwhich currently produces mainly electric vehicles. However, sales of these models have not reached the expected level, and the company has therefore been forced to review the quality of production.
The closure of a German plant marks a Change of strategy for Volkswagenwhich has historically had a strong industrial presence in its home country. This move will have significant implications for local operations and the entire German automotive industry.
Volkswagen, what will be the repercussions for the workers at that site?
The closure of a Volkswagen factory in Germany casts a shadow over the future of the workers of that location. The employees, most of whom have been with the company for decades, will face a uncertain future which could include the loss of jobor the redevelopment. In many cases, companies offer retraining programs to help employees find new jobs, both inside and outside the company. But retraining can be a long and difficult process, especially for older workers or those whose skills are closely tied to traditional auto manufacturing.
Another consequence of the closure of one of the factories is the moving elsewhere (However, this can lead to logistical and personal difficulties, such as the need to travel to other cities or countries, with consequences for family and social life.) Despite the difficulties, some workers can find opportunities in new sectors, particularly those related to sustainable mobility and technological innovation. The transition to a greener economy can indeed open up new positions, even if the transition is not immediate.
Volkswagen, union support and negotiation
In Germany, the unions are very present and are used to intervening in situations of this type. Unions can negotiate better conditions for workers, such as: a substantial severance package, the possibility of transfer, retraining, or the protection of a certain number of jobs. Negotiations can also aim to delay or avoid closures through agreements to reduce wages or change working hours.
The closure of the Volkswagen factory can have a devastating impact on the local economy, especially in places where the automotive industry is a major employer. Increased unemployment can lead to a reduction in local demand for goods and services, creating a negative effect on theGerman economy (but this is just a hypothesis, as the German economy is the most developed in Europe and one of the most developed in the world).
The fate of Volkswagen workers will largely depend on the company’s final decisions, negotiations with unions, and the support provided by the German government. Volkswagen, like other large companies, will have to balance the need to cut costs with its social responsibility towards its employees, trying to minimize the damage and offer the greatest possible support to those affected.
Volkswagen’s statements and the words of Groeger and Daniela Cavallo
Volkswagen stated the following:
“In the current situation, the closure of vehicle and component production plants can no longer be ruled out without rapid countermeasures.”.
In particular, it focused on the management of one of the largest factories in Germany and a plant considered “obsolete” for the purposes of the automaker. However, this is the first closure of one of its plants. The company said that management believes the brand needs to be completely overhauled and updated, and that current efforts to reduce staff through incentives, voluntary exit or retirement, are not enough to achieve the intended reduction goal.
Meanwhile, national president Thorsten Groeger (IG Metall) said:
“Today, the board presented an irresponsible plan that shakes the foundations of Volkswagen and massively threatens jobs and locations. This path is not only shortsighted, but extremely dangerous: it risks destroying the heart of Volkswagen. Such a clear cut would be unacceptable and will meet determined resistance.”.
Daniela Cavallo, Chairwoman of the General Works Council of Volkswagen AG, instead commented in these exact words:
“The council has failed. The result is an attack on our employment, our offices and collective agreements”
What will happen in the near future?
It is difficult to predict future developments. We can make a number of assumptions, one in particular is that Volkswagen will have to face difficult challenges in the coming years, and will have to implement cutting-edge strategies to face competition. Furthermore, it is necessary to specify that the closure of the factory is the beginning of a broader restructuring process.
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