Volkswagen CEO Oliver Blume revealed in an interview with Bild am Sonntag that the planned cost-cutting programme was inevitable to address decades of structural problems at the German carmaker.
“The weak market demand in Europe and significantly lower earnings from China reveal decades of structural problems at VW,” according to him. He went on to add that operating costs in Germany were the major factor limiting Volkswagen’s competitiveness, saying that “our costs in Germany must be massively reduced.”
Earlier reports from the head of Volkswagen’s works council emerged that the carmaker plans to close at least three plants in Germany, lay off tens of thousands of employees and cut the remaining plants in Europe’s largest economy as it plans a deeper-than-expected reorganisation.
The possible domestic plant closures may be the first in the 87-year history of Volkswagen, along with how the company is already facing resistance from unions in the country, where Volkswagen employs 295,000 people. That risks leading to strikes that could begin in December, with workers “ready to express their dissatisfaction with management.”
However, the carmaker has not confirmed the plans, but on Wednesday it asked its workers to take a 10 per cent pay cut, arguing it was the only way for Europe’s biggest carmaker to save jobs and remain competitive; because productivity at German plants is insufficient and production costs are 50 per cent higher than the company’s planned capacity.
