Volkswagen is planning to shut at least three factories in Germany, cut pay by 10% and put tens of thousands of jobs at risk of redundancy.
According to Daniela Cavallo, chair of VW’s works council and a member of the IG Metall union, the board wanted to close at least three factories in the country.
VW’s remaining manufacturing sites would reduce capacity, she said, citing information provided by management.
The company said that its German factories had significantly higher labour costs than the industry standard, and that the entire European car industry was under pressure because of costs involved with switching production from petrol and diesel to battery electric.
VW had warned last month that it had the equivalent of two factories of extra capacity in Germany and was scrapping an employment deal that guaranteed existing jobs until 2029, a measure that alone would save €10bn.
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The works council warned that redundancies would occur across the workforce, amounting to tens of thousands of jobs and whole divisions closed or sent overseas.
It added that real-terms pay could be a hit by a two-year freeze and be cut by up to 18%.
The plans would face concerted opposition, not only from unions but from state governments. For example, at one of the plants under threat, Osnabrück, 20% of voting rights are held by Lower Saxony administration, which is VW’s second-largest shareholder. The state’s leader, Stephan Weil, last month said plant closures should not be considered.
Volkswagen employs more than 120,000 people in Germany, about half of them in Wolfsburg, east of Hannover.
Volkswagen acknowledged in a statement on Monday that it had been in talks with labour representatives for more than a year about how to proceed, and had made clear over the summer that the “worsening economic situation required a fundamental restructuring”.
It said management would put forward “concrete proposals to lower labour costs” at upcoming salary negotiations.
Gunnar Kilian, the head of human resources on the management board, said: “The fact is, the situation is serious and the responsibility of the negotiating partners is enormous.”
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VW is considered to be Europe’s largest carmaker but has seen its share of the market in the continent fall while costs of energy, personnel and raw materials have risen. The sector was “stagnating and will not recover in the foreseeable future”, the company said.
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