Volkswagen Could Close Three German Plants, Lay Off Thousands
The Volkswagen Group will significantly reduce the size of its manufacturing footprint in Germany, according to labor officials. VW is reportedly planning to close three plants and lay off tens of thousands of workers.
While nothing is official yet, top labor officials told Reuters that closing plants and laying off workers is part of an ongoing campaign to cut costs across the VW Group. The campaign is a big deal, too: Volkswagen stands proud as the biggest carmaker in Europe, and it has never closed a factory in its home country of Germany.
“Management is absolutely serious about all this. This is not saber-rattling in the collective bargaining round,” warned Daniela Cavallo, the head of Volkswagen’s works council, in a speech to employees. As of writing, there’s no word on which factories would close or precisely how many workers would get laid off.
Volkswagen operates 10 plants in Germany and employs approximately 300,000 people. The plants that remain open and the workers that keep their jobs will be affected by the cost-cutting measures as well, according to a separate report. The group will allegedly downsize the other factories, cut the rest of the workforce’s salary by 10 percent, and freeze wages in 2025 and 2026. It aims to save about €10 billion (roughly $10.8 billion USD) by 2026.
Thomas Schaefer, the head of the Volkswagen brand, has previously said that German factories aren’t productive enough and noted that they’re operating between 25 and 50 percent above targeted costs. In turn, this eats into the company’s profits. Analysts told Reuters that several external factors compound this problem, including increased competition from Chinese brands and a lack of demand for electric cars.
Volkswagen hasn’t commented on the report, and it hasn’t announced plant closures or layoffs yet. It will lay out its plans during a meeting scheduled for Wednesday, October 30, when it also announces its third-quarter financial results.
This is the result of the combination of the German governments regulations forcing a company in a direction it is not prepared to go in a short time plus a combo of VW overreacting to it plus Dieselgate’s financial effects. Things do not look good right now and the automobile industry is a big part of their economy.
That’s what happens with rushing into electrification. Not to mention the infuriating haptic touch sliders.
Well they had no real choice speed up EV investment. They knew there is tons of tech that needs to be developed and perfected before the EV laws would force these cars. Also getting it cheaper in a package people will want.
Auto makers were afraid to push back with the woke media.
Sadly as they have to develop EV tech it takes from the ICE development.
Globally they just need to back off and let EV grow naturally. We had 20 years to develop ICE but only about 20 for serious EV tech.
I agree, hv6; it’s also dramatically unfortunate, the already-challenged electric power infrastructure in Europe, as well as the Americas (not to dismiss global), was not a primary consideration, before manufacturers were politically pressured to produce novel products, in deliberate efforts to satiate a perceived consumer market demand, which, at best, can only be characterized as capricious.
I also wonder about the plant in TN. Now that they have gone UAW they may have sealed their fait.
This plant could easily go to Mexico.
There are tough times coming and all MFGs will face them. Only Toyota and GM right now are some what stable. the rest are in need of a partner to deal with the future. Even Toyota and GM will still face challenges.
VW was one of the strong players and it took little time for them to fall. They tried the path of Volume and it looked good with all the brands but now not so good.
I really worry about Ford. They are struggling mightily with debts and lower profits. The Aluminum trucks hit them in the profits and they still own money on bank loans and the energy department loan they were given.
Bouncing around at $10-12 per share this week is not sitting well with share holders or the family.
The next couple years will see mergers and failures in the market as well partnerships. Even if EV is recended it will still be in the market place but spending will lower a bit.
The other story in addition to forcing EV adoption is Germany’s cost of energy has increased substantially. The third largest economy in the world struggles is a warning that adoption of green energy will not be cheaper it will be more expensive and could destroy a country’s industrial base. Even if one believes combatting CO2 emissions is paramount one has to come to a realization that over 60% of the emissions are coming from Asia and are growing dramatically. No matter what the West does it will not matter.
Maybe if the Luigi dressed plant workers laid off the schnitzel they could be more productive? Germany’s industrial base may be in the history books, global competition labor is substantially cheaper, and apparently generates better output. Doesn’t VW have plants all over the world. Any country that is forced to coddle its workers, and pay outsized wages for mediocre performance is harboring doomed industry.