Hit hard by Chinese competition, the leading European manufacturer is opening the way to possible layoffs.
Volkswagen employees under pressure. Europe’s largest automaker will begin crucial negotiations on September 25 regarding the future of its employees, on the path to an unprecedented austerity drive that could lead to plant closures.
“Due to the difficult situation for Volkswagen and the resulting uncertainties, the parties to the collective agreement have decided to bring forward the start of price negotiations by one month, initially scheduled for the end of October.”the group said in a statement on Thursday.
On Tuesday, the German auto giant officially terminated the employment guarantee agreement, in force since 1994 and supposed to run until 2029. This termination opens the way to possible layoffs from June 30, 2025 for the 120,000 employees of the VW brand in Germany, targeted by the cost-cutting measures. “Given the scale of the terminations […]we expect long-term discussions”the industry’s IG Metall union said in an internal memo.
Possible factory closures
Because the group’s investment plans and the cost-cutting measures desired by Volkswagen will also be on the agenda of the discussions. Plant closures in Germany, a first in the history of the group, are not excluded. The negotiations will take place in Hanover, where the headquarters of the largest German trade union is located. In total, six collective agreements defining labor relations within the Volkswagen group were repealed on Tuesday.
This affects a wide range of VW employees according to the union, from the highest paid employees to apprentice students and temporary workers. In total, the group employs around 300,000 people in Germany. Hit hard by Chinese competition and the fall in sales of electric cars in Germany, the world’s second largest manufacturer is sinking into crisis.
The current sales deficit corresponds to a “A shortage of about 500,000 cars, the equivalent of about two factories”acknowledged Arno Antlitz, the group’s financial director, earlier this month. A new blow for the German economy, the eurozone’s red lantern, with slowing growth and an industry suffering from rising energy costs.
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