Europe's largest carmaker, Volkswagen, will cut more than 35,000 jobs in Germany by 2030, or 29% of its total workforce, in order to reduce production costs, while avoiding factory closures and layoffs as part of an agreement sealed on Friday December 20 to try to save the group, in crisis.
These cuts will not be forced, and should in particular involve retirements that are not replaced, staff representatives stressed. “We have succeeded in finding a solution for employees at Volkswagen sites that guarantees jobs, preserves production in the factories and at the same time enables significant future investments”said Thorsten Gröger, negotiator for the IG Metall union.
He welcomed cost-cutting measures at a press conference “who respect the red lines” of the union: “There will be no factory closures and economic layoffs are excluded”he assured while this scenario was not ruled out by Volkswagen. According to the unions, management initially wanted to cut 55,000 jobs.
Four billion euros in savings hoped for
In exchange, employees agreed to waive bonuses and reduce production capacity in several of the group's ten German factories. With this agreement, Volkswagen hopes to release in total “4 billion euros” savings in the medium term.
“We had three priorities during the negotiations: reducing overcapacity at German sites, reducing labor costs and bringing development costs to a competitive level”explained Thomas Schäfer, boss of the group's flagship brand, “VW”, also the most in difficulty. “We have reached viable solutions on these three subjects”he assured.
The group, the flagship of German industry, caused a shock in September by announcing that it was preparing a drastic savings plan to restore its flagging competitiveness.
The group's chairman of the board, Oliver Blume, constantly repeats that the manufacturer's costs are too high and the profit margins of the historic VW brand, which represents a little more than half of sales, too low. Volkswagen is also suffering from the global slowdown in car sales, Chinese competition and battery models that are not attractive enough, which are slowing down the momentum of its transition to electric.
Source: Lemonde