Volkswagen’s board of directors unanimously approved the largest restructuring in the group’s history: the company will cut about 50 thousand more jobs, and four factories in Germany – in Emden, Hanover, Neckarsulm and Zwickau – may cease production after 2031 if no alternative capacity is found for them by then.
Taking into account previously agreed upon layoffs, the total number of positions lost during this time in the group will reach about 100 thousand.
The vote was the culmination of a months-long standoff between management and unions. Volkswagen has a parity management structure: half of the seats on the board of directors belong to employee representatives, and among the shareholders is the state of Lower Saxony, which usually softens the demands of management.
According to media reports, on the eve of the vote, CEO Oliver Blume was ready, in case of failure, to take an unprecedented step, bypass the board and submit the plan to a vote of shareholders. Previously, workers had staged protest meetings, booed Blume at a meeting at the headquarters in Wolfsburg, and the IG Metall union sharply criticized management’s harsh rhetoric in recent weeks.
The reason for the restructuring is the collapse of the concern’s financial performance against the backdrop of several factors: rising energy and labor prices in Germany, Trump administration duties on European cars and rapidly growing competition from Chinese manufacturers, especially in the electric vehicle segment. Volkswagen’s profit in the first half of the year fell by 11%, sales in China by 32%, and at the end of last year the group’s net profit fell by 53%, to 8.9 billion euros.
The union and the plant council in a joint statement emphasized that the final agreement prevented open conflict and a threat to the very system of joint management of the company. According to them, there is no final decision on the closure of factories yet – separate negotiations will be held for each enterprise in order to save as many jobs as possible.
Yesterday’s decision by the board of directors does not concern the fate of the Osnabrück plant, the closure of which in 2027 was previously approved as part of the first wave of cuts. The decision to transfer the plant to the government of Lower Saxony to create a joint venture with the Israeli defense concern Rafael will be made later.
In addition, according to German media reports, citing leaked internal documents of the concern, the company intends to completely curtail the production of the Spanish SEAT brand by 2029, transferring its niche to the Cupra brand.