Outrage sparked over possible Volkswagen plant closures

Executive at Volkswagen have defended plans to close factories, saying falling sales, especially of electric vehicles, have hit it hard.

“In the current situation, even plant closures at vehicle production and component sites can no longer be ruled out,” Volkswagen said in the note sent to employees.

“The European automotive industry is in a very demanding and serious situation,” Volkswagen CEO Oliver Blume was quoted as saying in the memo.

“The economic environment became even tougher, and new competitors are entering the European market,” Blume said.

The difficulties were particularly acute in Germany, which “is falling further behind in terms of competitiveness” as a manufacturing location, he added.

“We as a company must now act decisively,” the CEO said.

Outrage

Meanwhile, several thousand employees, fearful about their future protested, at Volkswagen’s historic headquarters in Wolfsburg ahead of the gathering, waving banners and blowing whistles.

Some 680 000 people are employed by Volkswagen worldwide, with over 300 000 working for the group in Germany.

Arno Antlitz, Volkswagen’s chief financial officer, said car sales in Europe were still far below pre-pandemic levels.

For Europe’s top carmaker, this meant a loss of around 500 000 vehicle sales a year, “the equivalent of around two plants,” he said.

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“The market is simply no longer there,” he told the meeting, attended by some 25 000 staff, with some following on screens outside.

“We need to increase productivity and reduce costs. We still have a year, maybe two years, to turn things around,” he added, without giving further details of the savings plan.

The comments from the finance chief in Wolfsburg came two days after the shock announcement was first made to staff in an internal memo.

Volkswagen last year announced plans for a 10-billion Euro savings programme and flagged cuts to its workforce over the coming years to improve profitability.

But the group said these further measures were now required after recent results disappointed.

However, the move to slash costs at one of Germany’s best-known companies has alarmed government officials and set Volkswagen on a collision course with the unions and its powerful works council.

‘Fierce resistance’

Daniela Cavallo, works council chairwoman, warned Volkswagen’s management would face “fierce resistance from the workforce”, promising there would be no site closures on her watch.

The group “is not in difficulty because of its German sites and the costs of German staff,” but because “the management board is not doing its job”, she told the meeting.

In Belgium, workers at the group’s factory in Brussels went on strike Wednesday over threats to the future of the plant.

But a site closure in Germany would be a first in the 87-year history of the group.

‘A car country’

The trouble at Volkswagen, which has struggled with the transition to electric vehicles and competition from overseas rivals, is a heavy blow to Chancellor Olaf Scholz’s government at a time the domestic economy was already struggling.

“Germany must remain a car country” Labour Minister Hubertus Heil said Wednesday following a meeting of the cabinet where ministers agreed new support for electric cars.

He called on Volkswagen’s management to “ensure that a reasonable and socially acceptable solution is found and that Volkswagen remains strong”.

Scholz himself was keeping “detailed” tabs on the situation, his spokesman said at a press conference, adding that the group was responsible for finding a solution together with workers.

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