AutoBeta(AutoBeta.net)09/25 Report--

On Sept. 25, local time, Volkswagen and trade unions began negotiations on slashing costs, focusing on Volkswagen's plan to abolish decades-old job protection and close its German factory for the first time earlier this month. IG Metall, the German metals industry union, vowed to fight the plans and threatened a strike by Volkswagen if implemented, paralysing Europe's largest carmaker for weeks. Union representatives said there would be no negotiations on plant closures and mass layoffs. If Volkswagen insists on the cuts, "thousands of colleagues will force the company back on track".

Earlier this month, Volkswagen said it was considering whether to close two German plants in order to cut costs and increase efficiency. "it will be difficult for local demand and Volkswagen sales to recover in the short term," Arno Antlitz, Volkswagen's chief financial officer, said at a staff meeting at Wolfsburg headquarters. "the company needs to improve efficiency, cut expenses and adjust capacity in order to survive the electrified transformation and the race against new competitors."

The workers expressed serious dissatisfaction with Volkswagen's decision. Daniela Cavallo, Volkswagen's top employee representative and member of the supervisory board, said at the meeting, "opposing any factory closure plan, workers should not pay for the company's management mistakes." "it is still about 3 billion euros short of completing the 10 billion euros cost-cutting plan proposed by the Volkswagen brand, but labor costs account for only a small part of the plan, and its role in completing the plan is very limited," she said. Volkswagen is in trouble not because of labor costs, but because Volkswagen's management committee is not doing its job. " Instead of giving priority to protecting the jobs of local German workers, Volkswagen is considering spending 5 billion euros on a partnership with Rivian, an American auto new power company, it said.

On September 2, Volkswagen of Germany issued a statement saying that in order to solve the problem of overcapacity and declining competitiveness, and to further cut costs, it would consider closing German factories, including a larger car factory and a parts factory, involving Volkswagen Group's major passenger car brands. It is understood that this will be the first time that Volkswagen has closed a factory in Germany since its establishment in 1926, and the closure and compulsory layoffs of local factories in Germany will be completed by 2026. In response, Oliver Blume, chief executive of Volkswagen, said the group must take further measures in the face of a difficult economic environment, industry competition and the weakening competitiveness of Germany as a manufacturing centre.

In addition, Volkswagen announced that it would end a series of job-guarantee agreements with unions, which were supposed to protect jobs until 2029, but will now end early in the middle of next year. In the face of fierce competition from European competitors and Chinese carmakers, all Volkswagen brands need to undergo a comprehensive restructuring to control factory, labour, product and material costs, Oliver Blume said in a statement. Gunnar Kilian, head of human resources at Volkswagen, said in a statement that the series of measures were aimed at "reducing costs in Germany to a competitive level" in order to use the saved resources to invest in new technologies and products.

It is understood that Volkswagen previously announced a cost-cutting plan to save 10 billion euros (78.67 billion yuan) by 2026 and set an operating profit margin of 6.5%, but according to Volkswagen's performance in the first half of the year, this goal is basically impossible to achieve, so Volkswagen has to point the finger at workers and reduce costs by closing factories and laying off workers.

In addition to Germany, Volkswagen also plans to cut hundreds of jobs in the Chinese market, and high-end brand Audi will also start layoffs. In response, Volkswagen China responded that Volkswagen Group (China) is continuing to improve the efficiency and optimize costs of its departments and projects. The relevant measures also involve direct manpower costs and indirect manpower costs, including administrative expenses, travel expenses and training costs.

No matter Volkswagen or other automobile companies, factory closure and layoffs are the most effective and fastest way for enterprises to reduce costs and increase efficiency. Not only car manufacturers, including German car supply chain companies, are also pushing for layoffs, and some have even been overwhelmed to declare bankruptcy restructuring. The prospect of factory closure by Volkswagen, one of Germany's most famous companies, is a further wake-up call for Europe's largest economy. Volkswagen is not an old-fashioned company, but it is difficult for elephants to turn around. it also has to face short-term labor pains.

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