Volkswagen set to close three German plants and cut thousands of jobs

Volkswagen’s management wants to close at least three plants, cut tens of thousands of jobs, and also slash pay by 10% for remaining staff, according to a statement from staff representatives.

The manufacturer is also seeking to downsize all remaining plants, added the document.

This will, it claims, result in the outsourcing of many tasks and whole divisions to external service providers.

“This is the plan of Germany’s largest industrial group to start the sell-off in its home country,” said General Works Council Chairwoman Daniela Cavallo, speaking at VW’s main plant in Wolfsburg.

“All German VW plants are affected by this. None of them are safe!”

The announcement comes after Volkswagen recently issued its second profit warning in less than three months.

Weak demand in Chinese and European markets, along with a botched electric vehicle transition, have hit the manufacturer’s earnings.

On top of the 10% pay cut, there will be a two-year wage freeze in 2025 and 2026.

The board also wants to abolish a monthly €167 collective bargaining premium and other bonuses.

Clarity on future job losses

If announced closure plans go ahead, this would be the first time Volkswagen has shut a factory on home soil in its 87-year history.

VW currently has 10 plants and 300,000 employees in Germany.

The firm warned earlier in the year that plant closures may be on the cards due to increased competition from Chinese brands and a consumer spending slowdown.

Unions are now calling for greater clarity over the future of Volkswagen.

“For over a year now, the Board of Management has failed to provide us with the targets for the VW core brand…the Board still shows no sign of a plan for the future,” said Daniela Cavallo.

She argued that cuts couldn’t be justified if there were no certain targets to be aiming for.

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Cavallo also called on politicians to produce a “comprehensive plan” for the electric vehicle transition and to boost Germany’s viability as an industrial hub.

Cited by Reuters, a government spokesperson said: “It is well known that Volkswagen is in a difficult situation…The Chancellor’s position on this is clear, namely that possible wrong management decisions from the past must not be at the expense of employees. It is now a matter of preserving and securing jobs.”

On Wednesday, union leaders will meet VW representatives for the second round of collective bargaining negotiations.

VW is also reporting third-quarter financial results on Wednesday.

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When Euronews asked Volkswagen about Monday’s developments, the firm sent via email a previously-published statement on the restructuring process.

It said that cuts were designed to make the company “sustainably competitive”.

Volkswagen Passenger Cars CEO Thomas Schäfer said: “We have to get to the root of the problems: we are not productive enough at our German sites and our factory costs are currently 25 to 50 percent above target. This means that some of our German plants are twice as expensive as our competitors.”

He stressed that operations “cannot continue as before”.

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Volkswagen also added in their email: “We are not taking part in speculation surrounding the confidential talks with IG Metall and the works council at collective bargaining and restructuring level.”