Volkswagen's Billion-Euro Efficiency Drive Nearing Finish Line by Year's End
The Lowdown
Volkswagen's Works Council chairwoman, Daniela Cavallo, shares that negotiations for Volkswagen's billion-euro cost-saving drive are nearly wrapped up, as critical details are set to be finalized by year-end. The move to abandon the "Campus Sandkamp" development enthusiast center project and the reallocation of funds to enhance existing buildings illustrates Volkswagen's tenacity in hitting their cost savings targets.
In-Depth
Volkswagen and their Works Council have been engaged in talks since October with the intention of slicing Volkswagen's costs by a staggering €10 billion by 2026. This plan, referred to as the "Performance Program," aims to boost the return on sales from 3.4% to 6.5%, according to official Thomas Schäfer at the meeting in Wolfsburg.
By axing the "Campus Sandkamp" development center, Volkswagen will now invest €450 million in upgrading existing structures rather than investing €800 million in new construction. This strategic shift showcases Volkswagen's commitment to realizing substantial cost savings, as highlighted by Schäfer.
Unavoidably, job adjustments remain on Volkswagen's agenda, necessitating a lesser workforce in various fields. Although Schäfer enacted a hiring freeze as an immediate response, negotiations will necessitate compromises, as Cavallo reiterated certain restrictions for negotiations, such as a ban on wage scale reductions and job insecurity until 2029.
The Works Council will also explore the possibility of introducing partial retirement as an option to decrease the workforce, ensuring a balance between corporate needs and employee wellbeing.
Volkswagen's Cost-Saving Strategies
Volkswagen's multi-pronged cost-saving tactics include workforce reductions and various cost-cutting measures. The automaker aims to trim its workforce in Germany by more than 35,000 employees by 2030, ultimately reducing domestic costs and aligning their internal wage structure with lower industry benchmarks by 2027.
The Wolfsburg plant will be restructured to incorporate modern technologies and new production processes, serving as a hub to create a new all-electric compact car platform and budget-friendly entry-level electric vehicles.
The Works Council, under Daniela Cavallo's leadership, has played a pivotal role in negotiations, advocating for employee interests and representing concerns during the restructuring process. Despite enduring financial sacrifices, such as benefit reductions, the council fostered acceptance from team members by clarifying the reasons behind these measures and addressing their concerns.
