Crisis at Volkswagen. Chapter XX.
We could well start this article like this because, almost daily we have new news about the German giant and its internal crises. Yes, the one that threatens to lay off thousands of employees in Germany, close three factories and reduce the salaries of workers who remain at the helm.
These have been some of the latest information that we have learned about a story that took its first steps in the summer of 2023 when Thomas Schäfer stated that the Volkswagen Group was “on fire” and that they should save 10 billion euros in three years. A story that, yes, had been brewing much earlier, as was already hinted at by the departure of Herbert Diess, who left his position as CEO of the Volkswagen Group a year earlier, in the summer of 2022.
With this savings plan necessary for the survival of the company, according to its own managers, comprehensive reforms and others of lesser significance are being undertaken, such as the withdrawal of the Porsches that were given to the group’s senior executives.
But, without a doubt, the largest reform seems to focus on work. The company has a serious problem: they need to reduce the volume of vehicles to adapt it to real demand. And that path involves reducing the workforce, closing plants…. or manufacturing for others.
An emergency exit
The information is brought Bloomberg. According to the economic media, the negotiation table between the company and employees has on the table to decide whether the Emden factory, where 8,900 people currently work, dedicates its services to producing vehicles for third parties.
“The management has proposed selling the Osnabrück and Dresden plants. Volkswagen is also considering the possibility of using its Emden plant for the third party manufacturing“, can be read in the information of Bloomberg in which they quote “people who asked not to be named.”
The decision would be an emergency exit to save this factory and not join the closures of Osnabrück and Dresden, (2,300 and 340 employees, respectively) and which would represent the first closure of a Volkswagen plant on German soil since the Second World War.
The company needs, according to its managers, to reduce its production by half a million units to adapt to the real demand for vehicles. Between 2016 and 2019Volkswagen was the automobile conglomerate that more cars sold in the world and has continued to fight with Toyota to reach first place. However, in 2022 they confirmed that they were throwing in the towel to focus on the sale of more expensive and profitable models for the company, despite losing market share.
That strategy involved increasing the production of electric cars. However, the market has not accepted Volkswagen’s proposal as the company expected and its billion-dollar investments have collided with software problems, a European market in which The sale of electric vehicles has slowed down and a decline in sales in China.
but also a extremely complicated situation in Germany which has helped drive up costs. They collect in Motorpassion that the company has emphasized the high salaries that its employees earn, which leads the company to spend more money to this item than BMW or Mercedes, given that almost 45% of their workforce is in the German country.
The country is also suffering high energy priceswhich drag from the veto on Russian gas, which reinforces Volkswagen’s position that it is necessary to reduce its production on German soil or, as has already been put on the table, dedicate the plant to producing third-party models.
Photo | Volkswagen
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