Volkswagen’s top employee representative announced on Monday that the company is considering closing at least three of its plants in Germany, with the possible loss of thousands of jobs and a proposed wage reduction of 10 per cent.
If the restructuring takes place, it will be the first time in Volkswagen’s 87-year history that it has shut down domestic plants, prompting a possible conflict with unions. Currently, Volkswagen operates 10 plants and employs 300,000 staff in Germany.
It is believed that extreme measures are required to navigate Volkswagen through an increasingly competitive car market, particularly in China, slumping sales in other major regions, and the financially demanding shift to electric vehicles.
The company lately issued its second profit warning within a three-month period, citing a “difficult market climate”.
When asked for comment on Monday, Volkswagen did not provide any details about what it described as “confidential discussions” with IG Metall union and the works council but acknowledged the company is navigating a “critical juncture”.
The works council, which plays a crucial role in representing VW employees and fills half of the positions on the supervisory board, is led by Daniela Cavallo. She issued an ultimatum of two days to the company’s executives to reconsider the restructuring plans and hinted at potential strikes. Cavallo warned CEO Oliver Blume that the workforce might abandon talks and take necessary measures to protect its existence if these plans take effect. – Copyright The Financial Times Limited 2024.