At Volkswagen, the Supervisory Board and the Works Council are taking a stance on Group CEO Oliver Blume’s initiative to stabilize the automaker’s balance sheet through an even stricter cost-cutting program. Resistance from both bodies had been expected. According to media reports, Volkswagen now faces “a months-long battle over jobs and costs.”
Volkswagen CEO Oliver Blume is convinced that the company can only secure its long-term future through a comprehensive restructuring. Details of his plans were leaked two weeks ago: at the end of June, Manager Magazin reported that the executive board, led by Blume, is pursuing a far more radical restructuring strategy than previously known, citing a board presentation titled “Group Target Picture” for 2030.
According to the report, the plans include the closure of four plants in Germany and the elimination of 100,000 jobs worldwide. Der Spiegel later reported that Blume plans to end production at the Zwickau and Emden plants by 2031. The Hanover plant is expected to follow in 2032, while the Audi plant in Neckarsulm is reportedly slated for closure in 2034.
For now, the document remains an internal paper, and its contents are based on insider information. However, according to media reports, the ‘Group Target Picture’ was presented to the Supervisory Board last week.
Handelsblatt now describes the meeting as a ‘setback in the supervisory board’, reporting that Blume failed to secure majority support in an initial vote on his future strategy.
Heading for a struggle
As no majority was reached, the newspaper says Volkswagen now faces a months-long power struggle. However, according to sources within the company cited by Handelsblatt, the CEO remains determined to push ahead with his restructuring plans. He reportedly intends to implement the strategy “in stages, if necessary, even against the resistance of employees and the state of Lower Saxony.”
Meanwhile, Volkswagen’s Works Council, the powerful IG Metall union, and the state of Saxony, a shareholder in Volkswagen, have publicly criticized CEO Oliver Blume and, according to Manager Magazin, plan to use works meetings to pressure him into discussing his cost-cutting plans with employees. Blume had previously ignored a deadline set for Friday, under which he was required to address the workforce.
The plants at risk include Volkswagen’s German factories in Hanover, Zwickau and Emden, as well as the Audi plant in Neckarsulm. This quartet of factories was already identified as problematic during a Supervisory Board meeting in April, ‘due to high costs’, as Manager Magazin recently reported.
The Executive Board is reportedly in favor of phasing out production at all four sites, allowing only the current model generation to be built there. In total, around 40,000 employees work at these four locations, which together have an annual production capacity of approximately 750,000 vehicles.
Apparently, a long, hot second-year half is awaiting VW management and its Boards as they work to reach an agreement acceptable to all sides. We will return to a possible group structure in a future article.
