Volkswagen prepares workers for imminent changes
Volkswagen, Europe's largest car manufacturer, has opened up about potential staff reductions, acknowledging the "critical" situation at hand. Brand boss Thomas Schäfer addressed 2,000 IG Metall shop stewards in Wolfsburg, confirming the need for "noticeable cuts" in personnel.
A looming efficiency program for Volkswagen's core brand was foreshadowed by Chief Human Resources Officer Gunnar Kilian. He suggested leveraging the demographic curve by promoting partial retirement and retirement plans, but still conceded that staff reductions were inevitable. Group CEO Oliver Blume emphasized a socially responsible reduction in personnel as part of the 10-billion-euro savings plan, targeting a 6.5% increase in the brand's return on sales by 2026.
Negotiations with the Works Council began in October, with Schäfer mentioning all potential measures on the table. The key points of the agreement must be agreed upon before the end of the year, aiming to safeguard Volkswagen's future as a future-proof employer.
The hiring freeze at important locations was an immediate response to the situation, with Kilian reiterating that affording staff cuts alone was not sufficient. The efficiency program involves more than just personnel measures, with the majority of the savings expected to stem from other measures.
Works Council Chairwoman Daniela Cavallo expressed firm red-lines during the meeting, ruling out any changes to collective agreements and job security until 2029, and outright dismissals for operational reasons prior to that date.
Aside from the potential workforce reductions, Volkswagen has additional goals in sight. Rapidly introducing nine new models by 2027, including the cost-effective ID. 2all and an entry-level electric car, will help drive the company's expansion in the electric vehicle market. Volkswagen is also focusing on upgrading internal wage structures and investing in new technologies like the Scalable Systems Platform, aiming to enhance production efficiency and promote growth.
According to Volkswagen's restructuring plan, the company aims to achieve annual savings of €4 billion in the medium term, with personnel reductions, benefit cuts, and operational efficiencies being the primary sources of these savings.
Sources:
- Enrichment Data:
- Volkswagen's restructuring plan includes planned workforce reductions of over 35,000 employees in Germany by 2030[2][4].
- The reduction will result from a combination of natural attrition and voluntary redundancies, aiming to avoid factory closures and forced job cuts until 2030[2][4].
- Workers may face significant cuts to benefits, including vacation pay, various bonuses, and allowances[2].
- Salary increases have been temporarily suspended, and the internal wage structure is set to align with lower industry standards by 2027[2].
- Volkswagen plans to cut capacity at five sites by approximately 750,000 units[4].
- The company aims to generate €4 billion in annual savings in the medium term through a combination of personnel reductions, benefit cuts, and operational efficiencies[4].
- Volkswagen has set a goal of introducing nine new models by 2027, including the production version of the ID. 2all, an inexpensive electric car, and an entry-level option priced around €20,000[1][5].
- The company is investing in platforms like the Scalable Systems Platform to improve scalability and production efficiency[1].
