Volkswagen warns of possible layoffs as it negotiates with works councils
Volkswagen executives are warning employees of job cuts as negotiations with the group's powerful works council heat up and the German carmaker sets the stage for a 10 billion euro cost-cutting program.
At a meeting with union representatives on Monday, Volkswagen brand manager Thomas Schäfer warned that the flagship company is not making “enough profits with our cars to independently finance the transition [to electric vehicles] and the our own future”, as reported by the FT . “Our administration is too expensive, our factories are not productive enough, and our costs are significantly higher than our competitors,”
In June the VW brand announced plans to cut 10 billion euros in costs by 2026, in a bid to boost profit margins in an increasingly competitive market for electric vehicles, as Chinese automakers such as BYD push into Europe. Schäfer said on Monday that incoming orders “especially for electric cars, are lower than our ambitious expectations.” Obviously no one talks about the high cost of electric cars and the public's general distrust of this type of vehicle.
The group, a fifth of which is owned by the German state of Lower Saxony, also produces the Porsche, Audi and Škoda brands. It has a famously large workforce, which is closely protected by the country's strong unions and its works council, a group of representatives elected by staff who negotiate with management. Partial public ownership and the presence of the works council, typical of the German system, make it very difficult to reduce staff.
Works council president Daniela Cavallo had argued in July that cost cuts would happen without "killing jobs" – a red line she reiterated on Monday, according to the memo, saying she would make VW stick to an agreement to guarantee jobs until 2029.
Instead, he said better management of the company and collaboration between the different brands was “the most important area of action”.
Clashes with the works council were partly responsible for the abrupt resignation of former VW Group CEO Herbert Diess last summer after he said the company had at least 30,000 excess employees among its 230,000 employees. employees in Germany.
Gunnar Kilian, VW's board member for human resources, said Monday that the company would exploit the "demographic curve" and reduce jobs by not replacing some retiring employees.
But he warned that VW will ultimately “have to move forward with fewer people in many areas [of the company].” “If we want to protect the VW brand for the future, we must also become more efficient in our use of personnel and openly discuss the issue of labor costs internally,”
The problem is that if the current poor sale of electric vehicles continues, greater efficiency will not be enough to keep the group afloat and we will have to start cutting jobs. In September the German brand had to announce the cut in production of several electric models because they were not being sold. Obviously no one continues to ask why.
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The article Volkswagen warns of possibility of layoffs as it deals with works councils comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-volkswagen-avverte-sulla-possibilita-di-licenziamenti-mentre-tratta-con-i-consigli-di-fabbrica/ on Tue, 28 Nov 2023 07:00:17 +0000.