Volkswagen, Europe's largest car manufacturer, plans to close at least three German plants, cut tens of thousands of jobs and reduce wages by 10 percent, a senior company official said on Monday, the Financial Times reports, UNN reports.
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This is the first plant closure in the company's 87-year history. Europe's largest automaker has warned that radical measures are needed amid fierce competition with China, slowing sales in other major markets, and the need to switch to electric vehicles, which is costly. Recently, the company issued its second profit warning in three months, blaming the difficult market situation.
VW's press service said on Monday that it would not comment on “speculation about confidential negotiations with (the trade union - ed.) IG Metall and the works council,” adding that the company is at a “critical point.
The Works Council represents VW employees and holds half of the seats on the Supervisory Board.
Daniela Cavallo, head of VW's works council, told employees at the company's main plant in Wolfsburg that management has two days to change its plans and hinted at future strikes.
She said that CEO Oliver Blum “is playing with a huge risk that... we will break off negotiations and do what labor has to do when it fears for its existence.
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In September, Volkswagen first announced that it was considering closing its German plants, but analysts were skeptical of this information due to strong opposition from politicians and the works council.
Like its German rivals Mercedes-Benz and BMW, Volkswagen is facing falling profits in China as consumers cut back on spending and local brands such as BYD regain market share.
The German concern, which will present its quarterly results on Wednesday, now expects its operating profit margin to be around 5.6 percent in 2024, down from its previous forecast of 6.5-7 percent.
In a sign of the deepening pressure on the Chinese market, Porsche, a majority-owned company owned by VW, reported a 41 percent drop in quarterly profit on Friday.
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