Volkswagen (VW) is facing an ‘extremely tense’ situation, prompting severe cost-cutting measures, including potential factory closures in Germany for the first time. This move marks a significant turning point in the company’s efforts to combat increasing price pressure from Asian competitors. Chief Executive Oliver Blume is at odds with influential unions, setting the stage for a major confrontation.
According to the works council, VW has deemed one large vehicle plant and one component factory in Germany obsolete, prompting a vow of ‘fierce resistance’ to the executive board’s plans. The company has announced the end of its job security program, in place since 1994, which prevents job cuts until 2029.
Analysts have identified potential targets for closure, including sites in Osnabrueck and Dresden. VW employs around 680,000 staff and is striving to achieve €10 billion in savings by 2026 as it streamlines spending to survive the transition to electric cars.
This move marks the first major clash between Blume and the unions, with the state of Lower Saxony, VW’s second-largest shareholder, supporting the review. ‘The situation is extremely tense and cannot be overcome by simple cost-cutting measures,’ said VW brand chief Thomas Schaefer. The company emphasizes its commitment to open dialogue with its works council.
