Volkswagen get ready to close three factories in Germany. The alarm, raised by the factory council and reported by newspapers such as BILD e The World, is part of a large restructuring plan of the group, which provides cost cuts for 4 billion euros, a salary reduction, tens of thousands of layoffs and the freeze on wage increases for the next two years. These interventions, already anticipated in recent weeks, have triggered strong protests among workers: today they stopped for an hour, blocking production and attending meetings organized in 11 plants for updates on the negotiations. “It is a deep stab in the heart” of the workers, said the union Ig Metall, which called the closure plans “unacceptable” and threatened consequences.
The beginning of these protests kicks off a Delicate week for Volkswagen which is preparing to publish the results third quarter, with both sales and profits expected to decline. In parallel, the German auto giant and the IG Metall union will resume negotiations for a second round of negotiationsThe stock drops 1,3% in Frankfurt.
Volkswagen: Cuts Ahead and Uncertain Future of German Plants
According to the economic daily newspaper Reuters, the board of directors of the Wolfsburg group has prepared a savings plan of around 4 billion of euros. Among the measures envisaged are a 10% reduction in salaries and the blocking of increases for 2025 and 2026. In addition to these measures, plans to lay off tens of thousands of employees and reduce bonuses for higher salary brackets and seniority. CEO Oliver Blume justifies these choices with the high costs associated with the Volkswagen brand, which is facing declining demand in Europe and strong competition from China's BYD, now the world's leading manufacturer of electric and plug-in hybrid cars.
The difficulties do not only concern the parent company, but also the group's premium brands, such as Audi e Porsche, which have traditionally been the main sources of profit. Both are experiencing declining demand in China: Porsche, in particular, has announced that it is evaluating a review of its model range and cost cuts to remain competitive.
The unions' accusations
The factory council, led by Daniela Cavallo, points the finger at a management defined as "unclear and ineffective", criticizing the management's choices on the transition to electric and pricing policies. "The management has not yet presented a clear plan for the future of Volkswagen", Cavallo declared in a recent newsletter, highlighting how workers feel excluded from a long-term strategy.
Cavallo also warned that all plants in Germany are at risk, “none are safe,” including the one in Osnabrück, which recently lost an order from Porsche. He then stressed that layoffs could start as early as mid-2025.
The second round of negotiations and future prospects
In addition to the publication of the quarterly results, Volkswagen and the IG Metall union will return to the negotiating table this week for a second round of negotiations. In the first meeting, held in September, Volkswagen rejected the request for a 7% wage increase, reiterating the urgency of containing costs. A spokeswoman for the company confirmed that the board of directors has already presented some “solution proposals” to the unions, while avoiding going into detail. The spokeswoman also recalled that the German giant is at a “historic turning point” and that the situation requires difficult choices and responsibility from all parties involved.
