Volkswagen set to cut jobs, close 3 plants in Germany

Plant closures and mass layoffs can no longer be ruled out

BrandPower Magazine 4 weeks agoLast Updated: 28/10/2024

2 minutes read

Volkswagen, set, to cut jobs, close 3 plants, Germany German automotive giant Volkswagen is for the first time in its 87-year history planning to close production sites in its home market, the company’s works council said Monday. It plans to close at least three plants in Germany and cut tens of thousands of jobs, head of the group’s works council said Monday.

BRANDECONOMY reports that the car giant, along with the rest of Germany’s once-vaunted auto industry, was slow to invest in electric vehicles and has struggled to catch up with the likes of U.S. rival Tesla and China’s BYD.

This follows the company’s communication of these plans to employees.

All Volkswagen plants in Germany would be affected by these plans, with remaining locations also expected to downsize, Daniela Cavallo has confirmed.

She shared this information at an employee event in Wolfsburg, Volkswagen’s headquarters, though no further details were provided, according to the German Press Agency.

Volkswagen operates 10 plants for its main brand in Germany, employing around 120,000 people.

Volskwagen announced in early September that plant closures and mass layoffs can no longer be ruled out to cope with rising costs.

Politico reports that Volkswagen last month canceled a 1994 agreement that protected its workers from layoffs until 2029, enabling business-related layoffs from mid-2025.

With sales in China declining almost 20 percent in the first half of 2024, Volkswagen — which is heavily invested in the Chinese market — is left with few options to make up for its monetary shortfall, making the plant closures an obvious target.

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Volkswagen’s historic plant closures come as Germany’s gross domestic product is set to shrink for the second year in a row.

The country’s growing economic difficulties are likely to become a key issue ahead of a federal election scheduled less than a year from now.

German Chancellor Olaf Scholz, meanwhile, is preparing for an industry summit to be held at the chancellery on Tuesday, where he — together with labor union bosses and the chiefs of some of Germany’s biggest companies — is expected to come up with a plan to revamp the country’s economy.

VW employs around 120,000 people in Germany, around half of whom work at the brand’s headquarters and main plant in the northern German city of Wolfsburg.

The VW brand operates a total of 10 plants in Germany, six of which are in Lower Saxony, three in eastern state of Saxony and one in the western state of Hesse.

In September, VW terminated a long-standing job security deal with labour unions that had been in place for more than 30 years. Layoffs are now possible from mid-2025.

Volkswagen has never closed a plant in Germany, and has not closed a plant anywhere in the world in more than three decades.

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The September announcement was major news across Germany, where it has been seen as a troubling sign for the country’s stuttering economy. Labour leaders have vowed to fight any cuts.

Executives from the Volkswagen Group, VW’s parent company, are scheduled to meet labour negotiators from the IG Metall trade union on Wednesday for a second round of talks on a new collective bargaining deal.

At an initial meeting in September, Volkswagen flatly rejected IG Metall’s demands for a 7% pay increase and insisted on savings instead. VW had not yet provided any further details.

But Cavallo said on Monday that VW is now demanding a 10% pay cut and no other pay raises for the next two years