Crisis-hit auto giant Volkswagen AG said on Friday it planned to axe 35,000 jobs by 2030 in Germany after reaching an agreement with unions on a drastic cost-cutting plan. The deal, struck at the end of marathon negotiations with labor representatives, would save Europe’s largest carmaker about four billion euros (US$4.2 billion) a year, the German group said.
The powerful IG Metall union hailed the agreement, which came just in time for Christmas and put an end to rolling strikes, saying it had averted forced redundancies and plant closures.
Volkswagen had originally said it was considering completely shuttering production sites in Germany, which would have been an unprecedented move in the 87-year history of the group, which also owns Audi, Porsche and Skoda.
Photo: AFP
“There will be no plant closures,” IG Metall union negotiator Thorsten Groeger told a press conference.
The agreement foresaw cuts to production across Volkswagen’s 10 German factories and corresponding job losses. Volkswagen’s smallest factory in Dresden would stop vehicle production at the end of next year and be converted to another use, the group said.
At a plant in Osnabrueck, where some 2,300 people work, production would continue until mid-2027 before “other uses” for the site are found.
The number of production lines at Volkswagen’s headquarters in the central German city of Wolfsburg would be reduced from four to two, the group said.
In the process, 4,000 jobs would be lost at the flagship factory by 2030, and the production of the popular Golf car relocated to a factory in Mexico.
In eastern Zwickau, a key site for the production of electric vehicles, the number of lines would be cut to one, the group said.
“We had three priorities in the negotiations: Reducing excess capacity at the German sites, reducing labor costs and reducing development costs to a competitive level,” Volkswagen chief executive officer Thomas Schaefer said at a press conference in Berlin.
In all three cases, the group had been able to find “viable solutions,” Schaefer said.
Overall, the carmaker would reduce its capacity in Germany “by over 700,000” units, he said.
“These are tough decisions, but also important decisions for the future,” he said.
Of the planned four billion euros in savings, 1.5 billion would come from lower labor costs and a progressive reduction in the group’s headcount, Volkswagen said.
The deal foresaw a pay freeze for employees next year and in 2026, and the spreading of previously agreed bonuses over several years.
The planned reductions in employees and production underlined how “VW is getting smaller and smaller in Germany,” said auto industry expert Ferdinand Dudenhoeffer from the Center Automotive Research.
The same was true for many of the country’s storied auto manufacturers, he said, adding: “Germany is losing importance for the automotive industry.”
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