Volkswagen is considering closing German factories for the first time in its 87-year history

The German Volkswagen states that the headwinds the automotive industry is not allowing it to rule out closing plants in its home country and it is forced to abandon a job protection commitment in force since 1994 that would have banned layoffs until 2029.

“The European industry of the car is in a very demanding and serious situation“said Oliver Blume, CEO of the Volkswagen Group, on Monday, citing the entry of new competitors In European markets, the deterioration of Germany’s positionas a place of manufacture and the need to “act decisively.”

Thomas Schaefer, chief executive of Volkswagen’s passenger car division, said efforts to cut costs were “paying off” but that “headwinds have become significantly stronger“.

European carmakers face the increasing competition of the Chinese electric cars low-cost. The company’s half-year results indicate that it will not meet its goal of saving 10 billion euros by 2026, according to the company.

Volkswagen Group’s core brand in the spotlight

The debate over closures and layoffs affects the company’s main brand, Volkswagen. operating benefits of the main brand fell to 966 million euros, compared to 1.64 billion euros the previous year.

The group also includes luxury brands Audi and Porschewhich have higher profit margins than mass-market vehicles made by Volkswagen, as well as SEAT and Skoda.

The company has tried to reduce costs by early retirements and purchases that avoid forced layoffs, but now says that those measures may not be enough.

The additional measures that affect plants or guarantee employment would be negotiated with the workers’ representatives. A plant closure would be the first of its kind since Volkswagen’s US plant in Westmoreland, Pennsylvania, closed in 1988, according to German news agency dpa.

Trade unions are against possible factory closures or layoffs

Trade union leaders and other workers’ representatives attacked the idea of closures or layoffsThe management’s approach is “not only short-sighted, but dangerous, as it risks destroying the heart of Volkswagen,” said Thorsten Groeger, chief negotiator with Volkswagen for industrial union IG Metall.

The highest representative of workersDaniela Cavallo, said that “the management has failed… The consequence is an attack on our employees, our plants and our labor agreements. With us There will be no plant closures“.

He Governor of the German region of Lower SaxonyStephan Weil, who sits on the company’s board of directors, agreed that the company should take action, but called on Volkswagen to avoid plant closures by resorting to Alternative ways to reduce costs“The regional government will pay special attention to this issue,” he said in statements reported by the dpa news agency.