VW’s warning on plant closures in Germany causes outcry – DW – 09/03/2024 | EUROtoday

Volkswagen’s announcement on Monday (September 2) that it’s contemplating closing factories in Germany is unprecedented within the German automaker’s 87-year historical past. Such plant closures have been thought of off the desk for the Wolfsburg-based firm.

To make issues even worse for the 680,000 VW staff worldwide, the administration additionally feels compelled to finish its job safety program which has been in place since 1994 and prevents job cuts till 2029.

Experts are already speaking about a major paradigm shift at Germany’s largest industrial employer, which attributable to its shareholder construction has all the time been an enterprise managed by the state and the Porsche household. The regional state of Lower Saxony nonetheless holds one-fifth of the corporate’s shares and a everlasting seat on the supervisory board, that means securing jobs and factories has all the time been seen as issues of state curiosity.

VW in dire straits as financial savings plan falls brief

That may change now that the administration believes the corporate is in a precarious place. Last 12 months, Volkswagen launched a cost-cutting program aimed toward saving €10 billion ($11.06 billion) by 2026. However, the mass-market carmaker would want to chop an extra €4 billion, in line with a report by German enterprise every day Handelsblatt.

In a letter to staff on Monday, VW model chief Thomas Schäfer described the scenario as “extremely tense” and past the scope of “simple cost-cutting measures.” VW Group CEO Oliver Blume added that the European automotive market is in a “highly challenging and serious situation,” and that Germany has fallen behind when it comes to competitiveness.

As a outcome, the ten automotive manufacturers throughout the VW Group should be comprehensively restructured, and “plant closures are no longer excluded,” Blume mentioned, including that layoffs by early retirement and severance packages are additionally now not adequate. Therefore, VW feels “compelled to terminate the employment protection agreement that has been in place since 1994.”

‘Punch to the intestine’

VW has not but offered particular numbers concerning how most of the roughly 120,000 jobs in Germany may be eradicated. It hasn’t additionally recognized which places may be closed. However, in line with statements by the highly effective VW works council, the administration considers not less than one automobile plant and one element manufacturing facility in Germany dispensable.

This may probably embody the plant in Emden, in northern Germany, the place Volkswagen and the Meyer shipyard are crucial employers within the area referred to as East Frisia.

“The prosperity of East Frisia depends heavily on these companies. Every unionized industrial job that is lost is a punch to the gut for the entire region,” the mayor of Emden, Tim Kruithoff, instructed DW.

The Emden mayor has the backing of labor union leaders like Thorsten Gröger, who described the VW plant closures “irresponsible plan.” The head of the regional metalworkers union IG Metall instructed the information company Reuters that the plan is “not only short-sighted but also highly dangerous,” and would danger “destroying the heart of Volkswagen.” Gröger additionally vowed to “fight with all our might” to protect all websites and jobs.

The VW works council, in the meantime, is especially enraged by VW’s reluctance to make clear who may be affected and the way. “This puts all German sites in the crosshairs — regardless of whether they are VW locations or subsidiaries, in western or eastern Germany,” mentioned Daniela Cavallo, head of the final works council. She introduced “fierce resistance.”

The starting of the transformation of the German auto business

Many consultants, nonetheless, imagine that plant closures at VW in Germany are inevitable. Helena Wisbert, director of the Center for Automotive Research (CAR) in Duisburg, Germany, thinks there’s “no way around it.” She instructed the German information journal Spiegel on Tuesday that up till now, low capability utilization within the crops may very well be offset by financial savings from suppliers. “That is clearly no longer enough,” she added.

Moritz Schularick, president of the Kiel Institute for the World Economy, sees the introduced cost-cutting measures as the start of a metamorphosis within the German auto business. He urges the German authorities to not intervene in struggling carmakers. “We should not stand in the way of structural change. Emerging industries are desperately looking for workers,” he instructed the German enterprise weekly Business Week.

VW’s flawed possession construction

CAR founder and director Ferdinand Dudenhöffer sees an “age-old VW problem” as a result of the carmaker is “more like a state enterprise than a market-driven company.” The downside will persist, he instructed DW, so long as VW’s firm construction stays “flawed.” Along with its 20% stake and a seat on the VW board, the state of Lower Saxony was additionally granted a blocking minority on key selections.

Lower Saxon State Premier Stephan Weil has already criticized VW’s administration, saying “the question of plant closures will not arise due to the successful use of alternatives.”

Emden Mayor Tim Kruithoff, in the meantime, is assured that issues won’t end up to turn into so dire for his city. “I am firmly convinced that the Emden plant will not be affected by a closure,” he instructed DW, noting that VW has invested “more than one billion euros” within the manufacturing facility to make it prepared for “the future of electromobility.”

This article was initially written in German