Volkswagen to close three factories and cut jobs in major costs plan

The Volkswagen works council has outlined cost-cutting plans that threaten to reshape the company’s operations in Germany.

In a meeting today, council chair Daniela Cavallo told workers the company’s board plans to shutter at least three of Volkswagen’s 10 German production facilities, while reducing capacity at the others, asserting: “None are safe!”

The closure of any plant would be a first for Volkswagen in its 87-year history.

Together with the plant closures, the plans put forward by the board include significant workforce reductions, salary cuts and the outsourcing of various departments abroad, Cavallo said.

She highlighted that the cost-cutting measures will affect all job categories, from skilled labour to management. She warned employees that “no one can feel secure in this situation”.

Cavallo said the measures proposed by the board could lead to the loss of tens of thousands of jobs. Volkswagen has approximately 120,000 employees in Germany, about half of whom work at the main plant in Wolfsburg.

She stated that the company’s strategy appears aimed at “bleeding out” employment opportunities.

The proposed restructuring includes a 10% salary reduction for remaining employees, a pay freeze for the next two years and the elimination of the monthly tariff allowance of €167, resulting in an estimated total pay reduction of around 18%.

Cavallo delivered a stark warning to Volkswagen management, saying: “Do not engage in conflict with us, the VW workforce. You are very close to escalation!”

In response, Volkswagen said it’s “not taking part in speculation” regarding factory closures but added that the situation was “serious”.

Its statement added: “Volkswagen is at a decisive point in its corporate history. The situation is serious and the responsibility of the negotiating partners is immense.

“The task now is to secure the future of Volkswagen AG with its Volkswagen Passenger Cars, Volkswagen Group Components and Volkswagen Commercial Vehicles in the long term together with the employee representatives. That is our goal.

“To this end, the board of management has submitted proposals for solutions to the employee representatives.

“In view of the developments in Germany as a business location, we must work together to find ways that will enable us to continue investing in our products and technologies on a sustainable basis.

“This is the only way we can rebalance the fundamental scales of profitability and employment.”

The next collective bargaining meeting will take place on 30 October.