Volkswagen plans to close at least three factories in Germany and lay off tens of thousands of employees.
The rest of its plants are in Germany It is also scheduled to downsize, according to the head of the company’s business council, Daniela Cavallo.
Europe’s largest carmaker has spent weeks negotiating with unions over its plans to revamp its business and cut costs, which have soared thanks to labor and energy prices.
The German company employs about 300,000 people in its home country and operates 10 factories, but it said that a major restructuring process was needed.
Ms. Cavallo told the staff VolkswagenThe largest manufacturer in Wolfsburg said that the company was “quite serious about all this” and that the proposals were not a “threat of war”.
Daniela Cavallo speaks to employees at the Wolfsburg plant. Photo: Reuters
Photo: Reuters
“This is the plan of the largest industrial group in Germany to start sales operations in its homeland, Germany,” she said, threatening to cut off talks with unions.
It did not specify which factories would be affected or how many employees could be laid off.
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The automaker is under intense pressure due to rising costs, strong competition from Asia, weak demand in Europe and China, and a slower-than-expected shift to electric vehicles.
She said she would put forward proposals on how to reduce labor costs on Wednesday, when workers and management meet for a second round of pay talks and the automaker reports third-quarter results.
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The company said it is committed to finding a solution with the unions.
The unions have been negotiating with the automaker for weeks. Photo: Reuters
Thomas Schäfer, who heads Volkswagen’s brand division, said German factories were not productive enough and were 25-50% above target costs – meaning some sites were too expensive compared to the competition.
Volkswagen shares fell more than 1% after the announcement, while Mercedes-Benz shares also fell.
Calls have been made for the government to intervene and assist the industrial sector in Germany.
A government spokesman said that Berlin is aware of the difficulties facing Volkswagen and remains in close dialogue with the company and workers’ representatives.