Volkswagen (VW) has announced a significant escalation in its cost-cutting measures, including the possibility of factory closures and layoffs in Germany for the first time in decades. The company’s management has stated that it can no longer rule out these drastic steps, citing the need for ‘swift countermeasures’ to address the challenging economic environment and increased competition.VW aims to save 10 billion euros by 2026 through its cost-cutting program, but recent setbacks have forced the company to consider reducing costs by an additional 4 billion euros. As part of these measures, Volkswagen has decided to end its job security program, which had been in place since 1994 and protected employees from layoffs until 2029.According to the works council, VW management considers at least one large vehicle plant and one component factory in Germany to be obsolete. If implemented, this would mark the first Volkswagen factory closure in Germany since 1988. The company’s CEO, Oliver Blume, stated, ‘The European automotive industry is in a very challenging and serious situation. The economic environment has become even more difficult, new competitors are pushing into Europe, and Germany’s competitiveness is declining’.The announcement has sparked fierce resistance from unions and the works council. Daniela Cavallo, head of the works council, called the plans ‘an attack on our employment, locations, and collective agreements’ and vowed to resist ‘with all our might’. The IG Metall union described the decision as ‘irresponsible’ and one that ‘shakes the foundation’ of Volkswagen, Germany’s largest industrial employer.Despite the controversy, the Frankfurt stock exchange reacted positively to the news, with Volkswagen’s shares rising by 2.57% to €98.60 following the announcement. This response suggests that investors view the cost-cutting measures as necessary for the company’s long-term competitiveness in an increasingly challenging automotive market.
Key points
- Volkswagen announces potential factory closures and layoffs in Germany as part of cost-cutting measures.
- VW ends long-standing job security program, aiming to save 10 billion euros by 2026.
- Works council and unions vow to resist the plans, calling them an attack on employment and collective agreements.
- Volkswagen’s stock rises 2.
57% following the announcement, despite controversy.
Contradictions👾While most sources agree on the potential for factory closures, there is some variation in the reported figures for cost savings.
Some articles mention 10 billion euros by 2026, while others add an additional 4 billion euros in savings.
