The News
Volkswagen said Monday it is weighing factory closures in Germany and reconsidering its pledge not to cut jobs until 2029, setting up the automaker for major labor disputes.
“The economic environment has become even tougher and new players are pushing into Europe,” VW CEO Oliver Blume said in a statement reported by Bloomberg. “Germany as a business location is falling further behind in terms of competitiveness.”
Any shutdowns would mark the company’s first closures in Germany since it was founded in 1937, and would deal another blow to Chancellor Olaf Scholz’ fragile government.
In a note circulated to employees and obtained by the Financial Times, VW’s works council said that Thomas Schäfer, head of the passenger vehicle division, “admitted” the company’s savings program had fallen short.
“As a result, the executive board is now questioning German plants, the VW in-house collective wage agreements and the job security programme running until the end of 2029,” Daniela Cavallo, chair of the works council, wrote in the note.
VW earlier this year said it expected sales to slow throughout the year as the industry grapples with a declining demand for electric vehicles and intensifying competition, particularly from Chinese EV makers. VW is especially vulnerable, since China accounts for about a third of its sales, Reuters reported.