Is the struggling Volkswagen Group taking the axe to its workforce? According to a media report, tens of thousands of jobs in Germany could be affected. VW and the union plan to negotiate next week.
Will there be massive job cuts at Europe’s largest car manufacturer, VW? According to a report in “Manager-Magazin,” the ailing company could cut up to 30,000 jobs in Germany in the medium term. The company did not confirm the figure. The general works council stated: “This figure has no basis whatsoever and is simply nonsense.”
According to the magazine’s information, CFO Arno Antlitz wants to cut funds for investments in the next five years to 160 billion euros. Most recently, VW had set 170 billion euros for the medium-term planning from 2025 to 2029.
The state of Lower Saxony is the second largest VW shareholder with 20 percent of the voting rights.
Spokeswoman: No confirmation, but Volkswagen has to save
A spokeswoman for Volkswagen AG in Wolfsburg said: “One thing is clear: Volkswagen must reduce its costs at its German locations.” This is the only way the brand can earn enough money for future investments. “How we will achieve this goal together with the employee representatives is part of the upcoming discussions,” she said. She did not confirm the figure of 30,000 jobs.
Negotiations between VW and IG Metall will begin on September 25. IG Metall negotiator at Volkswagen, Thorsten Gröger, says: “First of all, the board must present its plans in concrete terms at the negotiating table next week. If Volkswagen wants to put the axe to the workforce, the employees will give the appropriate response.”
High costs for the core brand VW
VW is struggling with high costs in its core brand VW Passenger Cars. The carmaker has terminated the job security agreement it has had with the unions in Germany for decades, and factory closures and redundancies are under discussion.
Brand boss Thomas Schäfer wants to raise the operating return to the target level of 6.5 percent in the coming years.
Report: CEO Blume believes the “hardliners'” goal is realistic
The pressure is obviously so great that far-reaching cuts to the workforce are being discussed. According to “Manager Magazin”, hardliners in Germany are planning to reduce the number of jobs by 30,000 from 130,000 in the medium term. CEO Oliver Blume also considered this to be realistic in the long term in a small circle.
His predecessor, Herbert Diess, had already encountered fierce resistance with his speculations about job cuts on this scale – and had to withdraw such plans.
Red pen especially for research
According to the magazine, things could get particularly bad in research and development. According to some forecasts, 4,000 to 6,000 of the approximately 13,000 employees in Germany would have to resign. Partial retirement and severance payments would not be sufficient measures to achieve this.
As part of its investment planning, VW had already announced that it would have to spend a lot on new technology, drives, batteries and software in the years 2023 to 2024 – after which the investment rate should fall again.
Last year, 13.5 percent of sales in the automotive business were spent on property, plant and equipment and research and development, around 36.1 billion euros.
This year, CFO Antlitz has so far budgeted 13.5 to 14.5 percent of the proceeds for this purpose. In 2027, the quota should fall below 11 percent and in 2030 to around 9 percent, Blume promised investors last year. They have been complaining about the high expenses for years because they also reduce the financial scope for distributions to shareholders.
Source: Stern
