Volkswagen intends to shut down at least three factories and cut tens of thousands of jobs. The company also plans a 10% pay reduction for remaining employees, according to a statement from employee representatives. Downsizing of its existing plants is also on the table, which could lead to outsourcing tasks and entire divisions to external service providers.
Major Impact on German Operations
General Works Council Chairwoman Daniela Cavallo criticized the strategy, calling it a sell-off of Volkswagen’s operations in Germany. “All German VW plants are affected. None of them are safe!” she declared. Volkswagen’s plan would mark the first time in its 87-year history that it closes a factory in Germany. Currently, the company operates 10 plants and employs about 300,000 workers in the country.
Volkswagen’s decision follows its second profit warning in three months. The company blamed weak demand in China and Europe and challenges in the transition to electric vehicles. Earlier this year, Volkswagen warned that plant closures might be necessary due to growing competition from Chinese brands and slowing consumer demand.
Union Demands Clarity on Future Strategy
Unions have called for greater transparency from Volkswagen’s leadership. Cavallo criticized the company’s Board of Management for failing to present clear goals for the VW core brand. She argued that job cuts should not proceed without specific targets. Cavallo also urged German politicians to establish a comprehensive strategy for electric vehicle production and to enhance Germany’s industrial competitiveness.
In addition to pay cuts, Volkswagen plans a two-year wage freeze for 2025 and 2026. The company also aims to remove a €167 monthly collective bargaining premium and eliminate other bonuses. Unions have strongly opposed these measures, citing the absence of a clear company strategy.
A government spokesperson acknowledged Volkswagen’s difficult situation. They emphasized that past management errors should not harm employees and called for a focus on preserving jobs. Union leaders will meet with Volkswagen representatives for the second round of collective bargaining talks, coinciding with Volkswagen’s third-quarter financial report.
Volkswagen CEO Thomas Schäfer identified key issues with productivity and factory costs at German sites. He stated that operational costs are 25% to 50% higher than target levels. “Some of our German plants are twice as expensive as our competitors,” he explained. Schäfer made it clear that current operations cannot continue unchanged.
Volkswagen confirmed that discussions with IG Metall and the works council are ongoing. The company stated that its restructuring efforts aim to ensure sustainable competitiveness. It declined to comment further on confidential negotiations with labor representatives.