VW to Close German Factories, Lay Off Thousands and Cut Salaries
Volkswagen plans to close three German car factories, lay off thousands of German workers and cut salaries by 10% for those unaffected by the layoffs. VW’s works council leader Daniela Cavallo made the announcement on Monday, Reuters reports. If the plans come to pass, it will be the first time in VW's 87-year existence that the automaker has closed assembly plants in the automaker's home country.
The specific plants to be closed were not fully detailed, but VW currently has 10 plants in operation throughout Germany. Even if a plant isn’t being shut down, Cavallo went on to say that “all German VW plants are affected by this. None of them are safe.”
Those factories that won’t be shut down will reportedly be downsized, leaving it unclear just how many jobs will ultimately be lost along the way. Cavallo says entire departments are at risk of closure or relocation.
The drastic moves come as a major response to regain competitiveness as costs rise and demand weakens across Europe and China. Reuters reports that VW says its German factories were operating 25–50% above targeted costs.
"The situation is serious and the responsibility of the negotiating partners is enormous... Without comprehensive measures to regain competitiveness, we will not be able to afford essential investments in the future," Volkswagen Group board member Gunnar Kilian said.
VW workers in Germany are unionized, and the response to the news is already harsh, with strikes being one a potential outcome.
“If VW confirms its dystopian path on Wednesday, the board must expect the corresponding consequences on our part,” Thorsten Groeger, lead negotiator for IG Metall (a prominent German union) said in a statement Monday.
Volkswagen hasn’t specified any cuts outside of Germany. The various plants throughout the country produce a massive number of models for VW; As of now, the only plant reportedly called out as “at risk” by the council is the Osnabrück factory that produces the Porsche 718 models and the VW T-Roc Cabriolet. Porsche is phasing out its gas-powered 718s soon regardless, which would make that plant even more empty, as the new electric 718s are pegged to be built in Zuffenhausen.
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