German carmaker warns of stagnation in the European sector amid news of deeper-than-expected action
The German carmaker Volkswagen is planning to shut at least three factories in its home country, lay off thousands of workers and cut pay by 10%, according to the company’s union.
The deeper-than-expected cuts come as the company faces weak sales and slow expansion in the electric vehicle (EV) sector amid tough competition from Chinese manufacturers.
“The board wants to close at least three factories in Germany,” the works council chief, Daniela Cavallo, told employees at VW’s headquarters in Wolfsburg on Monday. Its remaining manufacturing sites will reduce capacity, she said, citing information provided by management.
As Europe’s top economy suffers a crisis in manufacturing and fears of mass unemployment, VW is aiming for a fundamental restructuring to cut costs. It had initially warned last month that it had the equivalent of two factories of extra capacity in Germany.
Too late the state of Lower Saxony and the work’s council together already have majority voting rights. By pure shares the Porsche/Piëch clan has a majority but the work’s council gets 50% - 1 seats on the board (generally the case for big German companies) so they can’t just dictate things.
That said the work’s council previously did agree to a severe downsizing, back when automation swept the industry they agreed to introduce it, opposing it would’ve meant the end of the company, but made sure that the most back-breaking jobs got automated first, and that staff reduction was done with early retirement and a stop to hiring, not massive layoffs. Something like this may happen again but the way that the executive council is acting right now – yeah I think their heads are going to roll. They’re acting as if the company wasn’t, ultimately, run by IG Metall (via works council and socdem state government).