German auto giant optimizes costs: radical changes at Volkswagen
Kyiv • UNN
German auto giant Volkswagen is planning a large-scale optimization by 2030, cutting a third of its staff. The company will not close plants, but will reduce production capacity and cut management salaries.
The auto giant Volkswagen will not close its 3 plants, but will cut staff by 35,000. The leader of the German automotive industry is adapting to new realities, writes UNN with reference to DW.
Details
The management of Europe's largest automaker warned trade unions that the upcoming negotiations on a new tariff agreement would not be about another salary increase, but rather about a radical reduction in excess capacity and, consequently, staff.
The reason is that the German auto giant turned out to be too big in the new competitive environment on the global market. And so it faced a sharp decline in profitability.
After four unsuccessful attempts at negotiations, which were accompanied by meetings between the group's management and the labor collective and two precautionary strikes, a compromise was reached during the fifth round, which lasted a total of 70 hours. It demonstrates the depth of the crisis faced by the Volkswagen Group and especially its main division, Volkswagen AG with the VW brand, and the readiness of both parties, the employer and the labor collective, to implement fundamental reforms.
They have agreed on truly ambitious decisions. None of VW's 10 car plants in Germany will be closed, but the number of employees, which currently stands at more than 120,000, will be reduced by more than 35,000. This reduction will not happen immediately, but over five years, until 2030. Therefore, there will be no mass layoffs at Volkswagen.
The management has committed itself to a “socially acceptable” downsizing. This means that vacant positions will be eliminated or, for example, the number of apprentices will be reduced. At the same time, production capacity will be reduced.
According to Oliver Bloom, Chairman of the Board of Management of the Volkswagen Group, in the medium term, Volkswagen will be able to save about EUR 15 billion a year. Of these, €4 billion will be generated through measures that are somehow related to personnel. After all, the agreements reached include not only staff reductions. Workers have refused to receive salary increases, and approximately 4,000 managers will have their bonuses cut.
As a result, in 2025 and 2026, they will earn 10% less than before, and in the next three years, salaries will also be lower than before, according to the Süddeutsche Zeitung, but Volkswagen has not yet confirmed this. So the leading German automaker has taken on two key problems of the German automotive industry at once, namely excess production capacity and high personnel costs.
In September, the Institute for German Economics in Cologne (IW) warned that the decline of the German automotive industry was inevitable. It published a study that proved that in the 21st century, the center of the global automotive industry had moved to China and Asia in general.
Recall
Media reports about a possible merger of Nissan and Honda to create a new holding company. The combined company with Mitsubishi will be able to sell more than 8 million cars annually, competing with Toyota and Volkswagen.
