Volkswagen Considers Plant Closings in Germany Due to Auto Industry Challenges
FRANKFURT, Germany (AP) — Germany’s Volkswagen is facing headwinds in the auto industry that may lead to plant closings in its home country. The company is dropping a job protection pledge that had been in place since 1994, which would have prevented layoffs through 2029.
Oliver Blume, CEO of Volkswagen Group, stated, “The European automotive industry is in a very demanding and serious situation.” He highlighted new competitors entering the European markets, Germany’s declining manufacturing position, and the need for decisive action.
Thomas Schaefer, CEO of the Volkswagen Passenger Cars division, mentioned that cost-cutting efforts have shown results, but the challenges have intensified. The company is facing increased competition from affordable Chinese electric cars, impacting its goal of achieving 10 billion euros in cost savings by 2026.
The discussion about potential closures and layoffs is focused on Volkswagen’s core brand, which experienced a decrease in operating earnings. The group also includes luxury brands Audi and Porsche, as well as SEAT and Skoda.
Efforts to reduce costs through early retirements and buyouts may not be sufficient, with Volkswagen considering alternative measures. The company, which employs around 120,000 workers in Germany, has not closed a plant since its U.S. facility in Pennsylvania shut down in 1988.
Union officials and worker representatives have criticized the idea of closures or layoffs, emphasizing the importance of preserving jobs and locations. The governor of Lower Saxony, a member of Volkswagen’s board of directors, urged the company to explore cost-saving alternatives to avoid plant closings.
As Volkswagen navigates the challenges in the auto industry, it faces tough decisions ahead regarding its operations in Germany.