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In what seems like a major earthquake for the auto industry, Volkswagen, Europe’s largest automaker, has issued a warning of plant closures and mass layoffs in Germany. Executive Daniela Cavallo, head of Volkswagen’s works council, shared the news with hundreds of employees at the Wolfsburg plant, saying management was taking the measures seriously and that there were plans to close up to three plants in the country.
Volkswagen has been negotiating with unions for weeks over restructuring and cost reductions, facing growing tension between management and workers. Cavallo warned that the decision to close plants and implement mass layoffs is a drastic and unprecedented move in the automaker's history, stressing that the group did not specify which plants would be closed or the exact number of workers affected among the approximately 300 employees in Germany.
Volkswagen's plans put pressure on Olaf Scholz's government to adopt a strategic plan for the national industry. The German economy, now in its second year of contraction, is at risk of facing an even deeper crisis. Scholz, under pressure for new federal elections, faces a complex battle between avoiding mass layoffs while preserving the competitiveness of local industries.
Pressure for electric transition at Volkswagen and competition with China
Cavallo mentioned that there is consensus among Volkswagen workers and management about the challenges faced by the company: the transition to electric vehicles is occurring more slowly than expected, and competition from Chinese automakers, which are gaining market share in Europe, is increasing.We are not far apart when it comes to analyzing the problems. But we are miles apart in terms of the answers for them,” Cavallo said.
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This critical situation is not just affecting Volkswagen. Other German automakers have also announced cost cuts recently. Mercedes-Benz, for example, had already announced austerity measures after a significant drop in its profits. In addition, Porsche, controlled by Volkswagen, announced the reduction of its dealer network in China and cost cuts worth billions of euros due to weak demand in the Asian market.
Government and companies seek solution
The German government spokesman reiterated that the government is aware of the crisis and is in close dialogue with Volkswagen. In a statement, he said Chancellor Scholz's position is that any "wrong management decisions in the past should not harm employees" and that the focus now is on securing jobs.
With this alarming situation, Volkswagen and the government find themselves in a race against time. to reverse financial and operational problems. With the European market in recession and Asian demand falling, mass layoffs and factory closures are, unfortunately, a real possibility in the trajectory of one of the world's largest automakers.
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