Before the summer, VW Group CEO Oliver Blume warned of an additional 50,000 redundancies worldwide, bringing the total to 100,000 once the group’s restructuring is complete. The workers’ representatives fear an additional 40,000 job losses on top of these 100,000, bringing the total number of VW Group employees back from 660,000 to about 520,000 worldwide.
Oliver Blume has now started a tour of its German factories, trying to explain why these job cuts are necessary. Rumors say half would occur in Germany. Blume’s main argument is that the group’s fixed costs are 30% higher than those of many competitors. Overcapacity in the factories is also a major issue.
According to Blume, half of the job losses would occur in the home country, Germany, which, of course, hasn’t calmed the upcoming protest among the workers. The workers’ unions have made their own calculations and fear that an additional 40,000 workers would have to leave the group, on top of the 100,000 Blume is talking about.
Serious protest
Obviously, the workers’ representatives are not happy with this evolution, and Daniela Cavallo, President of the works council, has said confidence in management and the CEO has been seriously damaged. Nevertheless, both parties remain open to negotiations.
Blume has stipulated that the different plants have one year’s time to come up with alternative solutions. Blume is mainly aiming for voluntary departures and retirement, but his proposals are meeting heavy criticism. Christiane Benner of the powerful IG Metall union has called Blume’s plans to cut costs by 30% and raise profit margins by up to 9% “completely utopian”.
On Monday, a union representative said workers are ready for a long fight/strike if Blume doesn’t change his mind, even though the CEO has vowed that redundancies and plant closures would be “the most costly and last resort” to solve the problems.
The workers’ representatives regret that there are no perspectives yet for the future of plants like Emden, Zwickau, Hanover, and Neckarsulm (Audi) beyond 2030. “We can’t find an agreement with a management leader that isn’t really speaking out in front of its workers,” Daniela Cavallo complained.
Looking for alternatives
The workers’ representatives and the state of Lower Saxony, which holds 20% of the votes in VW’s Supervisory Board, are brooding on alternative solutions. Olaf Lies, President of the state of Lower Saxony, said that the size of the VW Group isn’t the problem but that one has to find complementary activities to give everybody a job, for example in the growing defense industry.
Lies also regretted that the CEO didn’t emphasize enough the good things that are still happening at VW, for example the growing success of its electric vehicles throughout Europe.
For sure, the battle inside the VW Group is just starting. The negotiations between management and employee representatives will undoubtedly be long and sometimes very hard. With its size and recent policies, the VW Group is the best example of what went wrong with the European car industry in recent years.
