Automotive News Europe — 2024-11-23
Automotive Industry
Volkswagen sees no chance of avoiding layoffs and plant closures in Germany to cut €4 bn ($4.2 bn) in costs, the brand’s CEO Thomas Schaefer said, amid an escalating dispute with workers.
Schaefer’s comments further deepen a conflict with unions, who have threatened strikes at the automaker from December and have asked the company to present solutions in ongoing negotiations over pay and capacity that exclude both factory closures and major job cuts.
“Ultimately, any solution must reduce both overcapacity and costs. We can’t just stick a band-aid on it and keep dragging it along. That would come back to bite us later in a serious way,” Schaefer told the weekly newspaper Welt am Sonntag.
Schaefer said most of the envisaged job cuts at the automaker, which the group has not quantified, could be done via normal attrition and early retirement. He added that this would not be enough.
“It would simply take too long. There is no point in delaying restructuring until 2035. By then, our competition would have left us behind,” Schaefer said.
He said VW’s restructuring needs to be done within three to four years.
Apart from job cuts and plant closures, VW has also asked workers at the VW AG unit, which is at the heart of the current conflict, to take a 10% pay cut.
Schaefer said there was no hope at the moment that demand in Europe would recover significantly. He also said that labor costs in VW’s German sites were roughly twice as high as those of peers and VW’s own sites in southern and eastern Europe.
He said savings efforts had resulted so far in a positive effect on profits of around €7.5 bn, adding that a further €4 bn in savings were needed.
Schaefer said the company currently saw no possibility to avoid plant closures in Germany, adding potential shutdowns not only referred to vehicle factories, but also to component sites.
Management has proposed selling car plants in Osnabrück and Dresden and using its Emden site for contract manufacturing, Bloomberg reported.