Cars parked inside a Volkswagen dealership in Berlin, Germany, on October 10, 2024.
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Volkswagen The company’s works council said on Monday it was considering large-scale pay cuts and layoffs, as well as closing or downsizing factories in Germany.
Works council president Daniela Cavallo said Volkswagen management recently submitted plans to the council that include a 10% across-the-board pay cut and a wage freeze in 2025 and 2026. Taking all factors into account, the agency estimates workers will suffer about an 18% pay cut during this period.
Workers with certain collective wage agreements will also lose bonuses and additional payments on their employment anniversary, the works council said.
Cavallo said Volkswagen also plans to close three plants in Germany and downsize all others.
Employees of German carmaker Volkswagen (VW) attend an information conference held by worker representatives at the company’s headquarters in Wolfsburg, northern Germany, on October 28, 2024, focusing on management’s latest savings proposals.
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“Concretely, this means that we are bringing out more products, volumes, shifts and entire assembly lines, far beyond what we are already doing,” she said in a statement released on Monday. “All German Volkswagen plants are affected by the No one is safe,” Cavallo added.
She warned of widespread layoffs as part of the automakers’ plans, noting that tens of thousands of jobs were at risk.
The committee further said Volkswagen plans to outsource some of its divisions to outside companies or to the automaker’s overseas factories.
Volkswagen’s dilemma
Volkswagen management presented its plans to the works council separately from ongoing discussions on a labor agreement, the works council said. The next round of negotiations is scheduled for Wednesday, when Volkswagen releases its latest quarterly earnings.
Volkswagen said in a statement on Monday translated by CNBC that the change was necessary due to economic conditions.
Volkswagen human resources chief Gunnar Kilian said the carmaker would not be able to afford further investments without taking significant steps to restore competitiveness, adding that the restructuring would ensure the company’s financial soundness going forward. .
Volkswagen Passenger Cars Chief Executive Thomas Schaefer said the company was not generating enough revenue from vehicle sales while energy, material and labor costs were increasing. He added that German factories were not productive enough and the costs were higher compared with Volkswagen’s targets and those borne by rivals.
Volkswagen also said on Monday it would put forward proposals to reduce work costs during collective bargaining talks later this week.
Shares of Volkswagen last traded down 1.4% at 12:28 pm London time.
Like many other German and European automakers, Volkswagen has been struggling amid a shift toward electric vehicles and an overall weakening global economy. Last month, the company The company cut its annual forecast for the second time in less than three months amid weaker-than-expected results from its passenger cars unit.
In September, the automaker warned of potential plant closures and said it would scrap a series of labor deals. This includes agreements with employees in specialist or leadership positions, casual workers and apprentices.
The company also said it would end an employment protection agreement that has been in place for German employees since 1994.
The announcements were met with strong resistance from the works council and Germany’s top trade union IG Metall.
On Monday, IG Metall chief negotiator Thorsten Gröger said Volkswagen’s latest plan was unacceptable and “strikes the hearts of hard-working Volkswagen employees.”
“If Volkswagen confirms its dystopian approach on Wednesday, the board needs to expect consequences from us,” he said, according to a CNBC translation.
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