Volkswagen Will Close Three German Factories in Cost-Cutting Efforts

Volkswagen’s labor council head, Daniela Cavallo, told employees, “Management is absolutely serious about all this. This is not saber-rattling in the collective bargaining round. This is the plan of Germany’s largest industrial group to start the sell-off in its home country of Germany.” Cavallo did not detail which facilities and employees would be impacted.

The automaker is facing waning demand in Europe and fierce competition from Chinese companies, leading it to pursue a restructuring plan to cut costs. VW said it would offer cost-cutting proposals by October 30, which is when it will release third-quarter financial results.

VW board member Gunnar Kilian reinforced the seriousness of the situation, saying that without cutbacks, the automaker would not have the funds it needs to invest in future vehicle and technology development. He also said the German factories were running above budget and underperforming, making some locations up to twice as expensive as other companies’ facilities.

Workers at VW’s German plants halted production in protest of the announcements. The automaker’s goal of saving up to $4.3 billion also involves a ten-percent wage decrease and a two-year wage freeze. Company management is reportedly considering a cap on bonuses for the higher-ups and may cut benefits for employee anniversaries.

[Images: VW]

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