By Rachel More and Christina Amann
WOLFSBURG, Germany, July 9 (Reuters) – Volkswagen’s proposal to cut up to 100,000 jobs and close four German factories faces a major test on Thursday as the groups that control Europe’s largest carmaker meet to discuss the plans, while workers protest against the overhaul.
Faced with high costs and excess capacity at home, rising Chinese competition and U.S. import tariffs, Volkswagen is under unprecedented pressure to restructure the business model that underpinned the group’s success for decades.
At Thursday’s supervisory board meeting at Volkswagen’s headquarters in the German city of Wolfsburg, scheduled to start at 1230 GMT, CEO Oliver Blume must convince the committee’s powerful labour faction to accept deeper cuts across the group, which includes the Audi and Porsche brands.
He also faces pressure from the Porsche and Piech owner families who have seen tens of billions of euros wiped off the market value of their core investments in recent years.
A Volkswagen spokesperson said the company shared workers’ concerns about the future but was reducing complexity and focusing on technologies to create the conditions for success in an increasingly demanding environment.
“We are tightening our investment portfolio and streamlining our corporate structures,” the spokesperson said in an emailed statement. “And yes, we will also have to reduce overcapacity.”
UNPRECEDENTED RESTRUCTURING PLAN COULD DOUBLE JOB CUTS
In what would be the group’s biggest restructuring to date, sources have said Blume is considering the closure of four German plants — Hanover, Emden, Zwickau and Audi’s Neckarsulm site — as well as 100,000 job cuts, double the current number.
Volkswagen’s supervisory board includes representatives from the owner families, unions and the state government of Lower Saxony, an uneasy combination that complicates decision-making.
In Blume’s last restructuring deal in late 2024, unions clinched a commitment from management to avoid German plant closures, prompting Volkswagen to seek alternative uses for underutilised sites.
This includes the long-running search for a defence partner for Volkswagen’s Osnabrueck factory and the possibility of producing models designed for the Chinese market in Germany.
Mobility Global data seen by Reuters estimates that the group’s car plants in Germany will operate at 81% of their standard capacity in 2026. That rate deteriorates to 73% by the end of the decade, even after the expected removal of Osnabrueck from the network.
In 2026, Zwickau is the best performer among the four sites threatened with closure with a utilisation rate of 88%, but that is forecast to drop to 42% by 2030, the data shows.
UNION CALLS FOR SAFEGUARDING GERMAN PRODUCTION
Ahead of the supervisory board meeting, Germany’s top industrial union IG Metall is rallying workers at around 20 Volkswagen Group sites across the country to protest against the plans and call on management to safeguard German production.
“This is a clear message to the board: Not on our watch!” IG Metall President Christiane Benner, who also serves as deputy chair of Volkswagen’s supervisory board, said in a statement.
“In difficult times, we stand together and demand that the group and policymakers come up with ideas and plans to ensure full capacity at our plants and protect us from unfair competition,” she added.
(Reporting by Rachel More and Christina Amann; Writing by Matthias Williams; Editing by Christoph Steitz, Emelia Sithole-Matarise, Elaine Hardcastle)
Comments