The white and blue Volkswagen logo stands on the roof of the brand tower inside the Volkswagen factory in Wolfsburg.
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German auto giant Volkswagen is preparing for a showdown with unions shortly after it said it would not rule out closing a factory for the first time in its nearly 90-year history.
Volkswagen management is expected to outline its plans to some 18,000 employees at a town hall meeting in Wolfsburg on Wednesday morning, amid speculation the carmaker could push for closures in Osnabrück, Lower Saxony and Factory in Dresden, Saxony.
A Volkswagen spokesman was not immediately available for comment when reached by CNBC on Tuesday.
Volkswagen warned on Monday it would no longer rule out closing a German factory, a move that underscored the challenges facing Europe’s top legacy carmakers.
The Wolfsburg-based company also said it felt the need to terminate its Employment Protection Agreement, a job guarantee scheme in place since 1994, to ensure “urgent structural changes are needed to Improve competitiveness”.
The logo of German car manufacturer Volkswagen (VW) appears on the front of the Volkswagen ID. The Buzz Pro electric van was unveiled on September 5, 2023 at the International Motor Show (IAA) in Munich, southern Germany.
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Volkswagen Group Chief Executive Officer Oliver Blume said in a written statement on Monday that the automaker needed “decisive action” to future-proof the company.
“The European automotive industry faces a very demanding and severe situation,” Bloom said.
“The economic environment has become more severe and new competitors are entering the European market. In addition, Germany, especially as a manufacturing base, is falling further behind in terms of competitiveness,” he added.
Volkswagen said all necessary measures would be discussed with the General Works Council, a group of elected employees who represent the interests of the company’s workforce, and Germany’s top industrial union IG Metall. Both groups, which hold significant sway at the company, were sharply critical of the proposals.
Daniela Cavallo of Volkswagen’s chief engineering board said the faction would “vehemently oppose” potential plant closures, while a spokesman for IG Metall described the plan as “shaking the foundations of Volkswagen and posing a huge threat to jobs and locations”. plan. ”.
“Core pillars of growth”
At around 12:50 noon London time on Tuesday, Volkswagen’s shares fell 0.5%, giving up the previous day’s gains. Over the past five years, Volkswagen’s share price has fallen more than 33%.
Volkswagen is trying to ride out the downturn as the automaker faces a difficult economic climate and an influx of new rivals in Europe. Transition to electric vehicles.
“The situation is extremely tense and cannot be resolved by simple cost-cutting measures,” Thomas Schaefer, Volkswagen brand chief executive, said on Monday.
“That is why we want to start discussions with employee representatives as soon as possible to explore the possibility of sustainably restructuring the brand,” he added.
Volkswagen stock over the past five years.
Volkswagen plans to consider an unprecedented closure of its German factories at a time of political tension in Europe’s largest economy. Berlin’s ruling three-way coalition, led by Chancellor Olaf Scholz, suffered a heavy blow in weekend regional votes.
A German government spokesman told CNBC via email: “The German automotive industry represents globally successful products and innovations. It is a core pillar of Germany’s growth and prosperity.” But he did not comment specifically on the measures planned by Volkswagen.
“At the same time, we are currently in a challenging phase of the transition to electric vehicles. This also requires the adaptation of traditional structures and measures to increase competitiveness,” the spokesperson added, according to Google Translate.
“Strong social partnership is a hallmark of the German automotive industry. The federal government therefore calls on the relevant social partners to continue to fulfill this responsibility in the future.”
Thomas Besson, head of automotive research at Kepler Cheuvreux, said Volkswagen’s problems reflected “the situation across the industry.”
“We are seeing a major fragmentation in the global automotive landscape,” Besson told CNBC’s “Roadmarks Europe” on Tuesday.
“This situation… is also unique to Volkswagen because they provide many guarantees to their workers,” he added.
—CNBC’s Annette Weisbach contributed to this report.
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