Volkswagen AG’s top labour leader said Europe’s biggest automaker plans to close at least three factories in Germany as part of wide-ranging cost reductions to become more competitive. The plans also include pushing through universal pay cuts at the main VW brand of 10% and shrinking all remaining sites in the country, works council chief Daniela Cavallo, who also sits on VW’s supervisory board, said in Wolfsburg, Germany.
“This means taking out even more products, quantities, shifts and entire assembly lines far beyond what we have already done so far. This is starvation, a weakening in instalments,” Cavallo said Monday in a speech in front of hundreds of VW workers.
Chief executive officer Oliver Blume has pointed to high costs at the VW brand, which is struggling with waning demand in Europe and intensifying competition from BYD Co in China. Unionists are saying that workers are made to pay for boardroom mistakes including a botched EV shift and bad pricing policy.
Cavallo’s speech was part of assemblies organised by the labour side at several VW sites across the country. They kick off a contentious week for Europe’s biggest carmaker, which is expected to post declining sales and profit when it reports third-quarter results on Wednesday.
VW’s cost-cutting push may threaten “tens of thousands” of jobs in Germany, Cavallo said. She added that luxury car maker Porsche terminated its production relationship and future model planning with the Osnabrück factory.
The automaker has had a rough few weeks since it issued its second profit warning in three months in late September. While its premium brands including Audi and Porsche have been the carmaker’s biggest source of profit in recent years, they’re now struggling. Porsche AG on Friday said it’s weighing cost cuts and reviewing its model lineup after a demand slump in China hit its profits.
Negotiations have so far produced no results. A grace period will run out next month, with warning strikes at VW sites in Germany possible from Dec 1. – Bloomberg
