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The closure of three Volkswagen plants in Germany will lead to mass layoffs, generating major impacts on the automotive industry and triggering changes in the sector. Check out all the details.
Mass layoff alert: Volkswagen is planning to close at least 3 units in Germany, leading to mass layoffs of thousands of employees, and to reduce the size of its remaining plants in the country, according to the head of the automaker's works council. Europe's largest automaker has been negotiating with unions for weeks about restructuring its business and cutting costs, including considering closing its plants in Germany for the first time in its history.
Understand the impact of the closure of the 3 Volkswagen factories
According to Daniela Cavallo, head of Volkswagen's works council, several hundred employees at the automaker's largest factory in Wolfsburg, this Monday, management is taking all of this absolutely seriously.
Cavallo did not say which auto plants would be affected or how many of the Volkswagen Group's roughly 300 workers in Germany could be included in the mass layoffs.
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The comments mark a major escalation of a conflict between workers at the company and management over mass layoffs following the closure of three Volkswagen plants. The company is under intense pressure to cut costs and stay competitive amid weaker demand in China and Europe.
Plans to close three Volkswagen plants are increasing pressure on the German government to act to revive the economy, which is facing a second straight year of hiring and has the coalition government struggling to Chancellor Olaf Scholz look for ways to foster growth. The chancellor is at a disadvantage in the polls, with federal elections scheduled for next year.
Berlin needs to present a master plan for German industry
Cavallo says Berlin urgently needs to come up with a master plan for German industry to ensure it doesn't go down the drain. A government spokesman stresses that Berlin is aware of Volkswagen's difficulties and remains in close dialogue with Volkswagen and workers' representatives to seek an option for mass layoffs.
However, the Chancellor's position on the matter is clear, that possible wrong management decisions in the past should not harm employees. The goal now is to maintain jobs and avoid mass layoffs with the closure of 3 Volkswagen plants.
Cavallo stresses that there is agreement between workers and management on the nature of the problems facing the automaker and many of its European peers, from a slower-than-expected transition to electric vehicles to fierce competition from Chinese automakers entering Europe.
Closing 3 Volkswagen plants promises to raise $4,3 billion
Workers' representatives will update VW staff at all 10 of the German car industry's plants on management's latest savings proposals, with many bracing for news of mass layoffs.
O CEO of Volkswagen, Oliver Blume, is seeking about four billion euros ($4,3 billion) in cost savings at the group’s VW brand, according to the Handelsblatt financial daily, citing company sources. To achieve this, VW could close several plants in Germany, the first time in the company’s 87-year history.
The plans are likely to anger workers' representatives, who have accused VW leaders of mismanaging the 10-brand group and putting profits ahead of building a sustainable future for the automaker.
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