Volkswagen (VW) has considered closing factories in Germany for the first time, marking a significant turning point in the company’s efforts to combat increasing price pressure from Asian competitors.
This decision pits Chief Executive Oliver Blume against the influential unions, setting the stage for a major confrontation.
According to the works council, VW has deemed one large vehicle plant and one component factory in Germany obsolete, prompting a vow of “fierce resistance” to the executive board’s plans.
Chief Financial Officer Arno Antlitz and Volkswagen brand chief Thomas Schaefer would address staff alongside works council head Daniela Cavallo at a meeting on Wednesday, which Cavallo expects to be “very uncomfortable” for management.
IG Metall, a powerful union, has successfully thwarted previous attempts at significant changes, including in 2022 when former CEO Herbert Diess departed.
Analysts has identified potential targets for closure, including sites in Osnabrueck and Dresden.
VW, which employs around 680,000 staff, has also announced the end of its job security program, in place since 1994, which prevents job cuts until 2029.
“The situation is extremely tense and cannot be overcome by simple cost-cutting measures,” said Schaefer in a statement.
As VW strives to achieve €10 billion in savings by 2026, the company is streamlining spending to survive the transition to electric cars.
This move marked the first major clash between Blume and the unions, with the state of Lower Saxony, VW’s second-largest shareholder, supporting the review.
“We will discuss all measures with our works council,” said a VW spokesperson, emphasising the company’s commitment to open dialogue.
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