2024-10-29 23:31:00
Hoy 20:31
Volkswagen AG is embarking on an unprecedented restructuring that is, in part, punishment for failing to address the German manufacturer’s long-standing problems.
The company plans to close at least three factories in Germany, Reduce the number of other factories in the country y About 140,000 workers will take a 10% pay cut. It also intends to freeze wages for next year and 2026, and scrap one-time pay payments to senior staff.
The breadth and depth of these measurements is surprisingand reflects the seriousness of the challenges facing a company that neglects to deal with overcapacity and high costs. While Volkswagen workers are protected by powerful works councils, government ownership and supervisory board representation, they are not enough to shield them from inefficient operational changes at the eponymous VW brand.
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“We currently don’t make enough money on cars, while our energy, material and personnel costs continue to rise.” Thomas Schaefer, CEO of the Volkswagen brand, said on Monday. ““We can’t continue as we have been.”
German automaker Volkswagen plans to close at least three plants and lay off workers
These issues coincide with the Volkswagen brand’s shift toward electric vehicles (EVs). Sales of its ID car series are not good in the country And abroad due to software problems. Volkswagen’s other consumer brands, Spain’s Seat and the Czech Republic’s Skoda, offer similar models that are often cheaper to compete for similar customers.
Volkswagen declined to comment on the details of the cuts. The issues surfaced on Monday at meetings of more than 50,000 employees across Germany, including in the company’s hometown of Wolfsburg, where works council president Daniela Cavallo Described as “starvation” and “the weakening of installments”.
Job cuts in Germany will worsen problems in Europe’s largest economyIt is expected to shrink for the second consecutive year in 2024.
Schaeffer said the Volkswagen brand’s factories in Germany were not productive enough and operating costs were twice as high as rival factories. As a result of Russia’s invasion of Ukraine, the country’s companies no longer have access to cheap natural gas. Many people are now investing more and more overseas.
“Volkswagen is undergoing a huge cultural changesaid Matthias Schmidt, an independent automotive analyst near Hamburg. “Previously, it would have been almost impossible to get cuts like this from unions and local government.”
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Worker representatives control half of the seats on Volkswagen’s supervisory board. This, combined with the fact that the company’s home state of Lower Saxony owns a large stake in the company and has its own controlling seat, has hampered restructuring efforts in the past.
Volkswagen has long dominated European car sales and fueled Germany’s postwar economic renaissance with popular models such as the Beetle and Golf. The latter was Europe’s best-selling car from 2007 to 2022, but its lead was taken away by Stellantis NV’s Peugeot 208. Tesla Inc’s Model Y topped the European rankings last year, with the Golf falling to seventh place.
Volkswagen brand’s operating profit margin in the first half of the year was only 2.3%Its sales margin is just over half of last year’s level, still far from its 2026 target of 6.5%.
The company will report third-quarter results on Wednesday. Analysts forecast falling sales and profits. A second round of negotiations with worker representatives will begin later in the day.
“These cuts are not just an attempt by Volkswagen to boost its profit margins”Schmidt said. “Companies need them to survive.”
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