VW to close ‘at least three German factories’

Volkswagen is planning to close at least three of its factories in Germany, slash jobs and cut pay by 10 per cent, the head of the carmaker’s works council said, as it tries to save billions of euros in costs.
Volkswagen, Europe’s biggest carmaker whose brands include Skoda, Audi, Bentley and Porsche, has been negotiating with unions for weeks over its plans to revamp its business and reduce costs. Closing a plant on home soil for the first time would be a blow to Germany’s sense of its industrial prowess.
Daniela Cavallo, the head of Volkswagen’s works council, threatened to break off the talks, telling employees at the company’s biggest plant, in Wolfsburg, that “management is absolutely serious about all this”.
“This is the plan of Germany’s largest industrial group, to start to sell off in its home country of Germany,” she said. However, Cavallo did not specify which plants would be affected.
A spokesman from Volkswagen said it is “not taking part in speculation” surrounding the negotiations but said the “situation is serious, and the responsibility of the negotiating partners is immense”.
“Volkswagen is at a decisive point in its corporate history,” the spokesman added. “In view of the developments in Germany as a business location, we must work together to find ways that will enable us to continue investing in our products and technologies on a sustainable basis. This is the only way we can rebalance the fundamental scales of profitability and employment.”
The company said it would make proposals for how to cut labour costs on Wednesday, when workers and management meet for the second round of wage talks and the carmaker releases third-quarter results.
The comments mark a major escalation of a conflict between Volkswagen’s workers and management. The company is under severe pressure from high energy and labour costs, stiff Asian competition, weakening demand in Europe and China and a slower-than-expected transition to electric vehicles.
They also heap further pressure on the German government to act on persistent weakness in the country’s economy, which faces a second successive year of contraction, with Olaf Scholz’s coalition searching for ways to spur growth. The chancellor trails in the polls with federal elections due next year.
The Volkswagen brand, which accounts for most of the carmaker’s unit sales, is the first of the group’s marques to undergo a cost-cutting drive, targeting €10 billion in savings by 2026 as it attempts to streamline spending to survive the transition to electric cars. Porsche has announced it is paring back its dealership network in China to reflect weak demand, while Mercedes-Benz has also vowed to step up cost-cutting measures.
Volkswagen shares closed down €0.96, or 1 per cent, at €91.34 in Frankfurt.