Carmaker Volkswagen is considering mass layoffs and factory closures in Germany for the first time in its 87-year history amid a serious risk of falling into deficit, DW reported.
Volkswagen Group Works Council Chair Daniela Cavallo issued a letter to employees on Monday warning that the company’s flagship brand is in danger of becoming unprofitable and that it plans to close at least one major car factory and another component factory in Germany.
“As a result, the executive board is now questioning German plants, the VW in-house collective wage agreements and the job security programme running until the end of 2029,” it said as published in the Guardian.
However, Cavallo, who also represents workers’ interests at the supervisory board level, said the company executives’ plans would face fierce resistance. “With me, there will be no plant closures,” he told employees.
“Very serious situation” in the European market
According to the company’s chief executive, Oliver Blume, the decision comes after an ambitious savings programme launched last year failed to achieve the billions of euros planned, as the company has only been able to cut costs by offering its employees early retirement and voluntary redundancies.
“The economic environment became even tougher, and new competitors are entering the European market,” Blume said, warning that the European automotive industry is in a “very serious situation.”
According to Bloomberg, Volkswagen employs around 650,000 people worldwide, almost 300,000 of them in Germany. Half of the seats on the company’s supervisory board are held by union representatives, and the German state of Lower Saxony, which owns 20 percent of the shares, often sides with the unions.
