Volkswagen plans to close at least three German factories, reduce pay by 10%, and threaten tens thousands of jobs with redundancy.
According to Daniela Cavallo of VW’s Works Council and a member IG Metall, the board was looking to close three factories within the country.
She said that VW’s remaining production sites would be reducing capacity. She cited information from management.
The company stated that it had higher labor costs in its German factories than the industry average, and that all of Europe’s car industry is under pressure due to the costs associated with the switch from petrol and diesel production to battery-electric.
VW warned last month it had two extra factories in Germany. It was scrapping a employment deal which guaranteed existing jobs up until 2029. This alone would have saved EUR10bn.
The works council forewarned that there would be redundancies across the workforce. This could mean tens or thousands of job losses and entire divisions being closed or moved overseas.
The pay freeze could have a negative impact on real terms and cut the salary by as much as 18%.
Not only would the unions, but also state governments be united in opposition to these plans. At Osnabruck for example, Lower Saxony, VW’s second largest shareholder, holds 20% of voting rights. Last month, Stephan Weil said that plant closures were not to be considered.
Volkswagen employs over 120,000 people in Germany. About half are located in Wolfsburg to the east of Hannover.
Volkswagen admitted in a Monday statement that it has been in discussions with labor representatives about the future for more than one year. It had also made it clear in the summer that “the worsening economic conditions required a radical restructuring”.
The management said it would make “concrete suggestions to lower labour costs” during upcoming salary negotiations.
Gunnar Killian, head of Human Resources on the Management Board, stated: “The situation is grave and the responsibility for the negotiating parties is immense.”
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VW, Europe’s biggest car manufacturer, has seen its market share on the continent decline while energy costs have increased. The company stated that the sector is “stagnant” and won’t recover in the near future.
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