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Volkswagen is considering shutting factories in Germany and ditching a pledge not to cut jobs before 2029, according to VW’s works council.
A savings programme launched last year has fallen short by several billions of euros at the company’s flagship brand. Daniela Cavallo, chair of the council that represents VW’s workers, said in a note circulated to employees that the VW brand’s chief executive Thomas Schäfer had on Monday “admitted” that planned savings had fallen short, pushing the brand into the red.
“As a result, the executive board is now questioning German plants, the VW in-house collective wage agreements and the job security programme running until the end of 2029,” Cavallo said.
Volkswagen said that from the board’s perspective, the brands within the company “must undergo comprehensive restructuring”.
The group CEO Oliver Blume said: “The European automotive industry is in a very demanding and serious situation. The economic environment became even tougher, and new competitors are entering the European market. In addition, Germany in particular as a manufacturing location is falling further behind in terms of competitiveness. In this environment, we as a company must now act decisively.”
Under German rules, works councils are elected to represent worker interests and sit on the supervisory boards of larger companies, such as VW.
The announcement comes as leading European carmakers are feeling the impact of lower demand in China and at home.
Compared to some of its European rivals, VW is exposed to problems in its biggest market of China, where consumer demand has weakened and competition from domestic carmakers is intensifying.
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