Volkswagen AG's CEO, Oliver Blume, indicated in an internal memo to staff that the company may need to eliminate approximately 50,000 more jobs to close a cost gap with its rivals. This potential downsizing would be in addition to a previously agreed-upon reduction of 50,000 positions.
In the memo, Blume pointed out that the company's operational costs are roughly 20% higher than those of its key competitors. Given that about half of the indirect costs stem from personnel expenses, a theoretical calculation suggests that, without changes to labor costs, this could lead to the loss of around 50,000 jobs.
The automaker is currently grappling with multiple pressures, including U.S. tariffs, weak demand in Europe, and intense market competition, which have halved its profits from the 2021 peak. To confront these challenges, Volkswagen Group is planning its most extensive restructuring ever. Beyond the total workforce reduction of about 100,000, the company is considering closing four plants located in Emden, Hanover, Zwickau, and Neckarsulm, Germany. It may also slash its product lineup by half and reduce annual production capacity to 9 million vehicles.
Blume acknowledged the difficulties facing these factories in the memo, stating that based on current conditions, it cannot be assured they will remain competitive into the 2030s. This aggressive cost-cutting initiative has met with strong opposition from labor unions. Reports indicate that union representatives blocked the proposal during a supervisory board meeting last week.
Comments