The white and blue VW brand stands on the roof of the model tower on the grounds of the VW plant in Wolfsburg.
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German automotive large Volkswagen is bracing for a showdown with commerce unions shortly after it mentioned it can not rule out shutting factories in its dwelling nation for the primary time in its almost 90-year historical past.
Volkswagen’s administration is predicted to put out its plans earlier than about 18,000 staff at a city corridor assembly in Wolfsburg on Wednesday morning, amid hypothesis that the carmaker may push to shut websites in Osnabrueck in Decrease Saxony and Dresden in Saxony.
A spokesperson for Volkswagen was not instantly accessible to remark when contacted by CNBC on Tuesday.
In a transfer that underlines the challenges dealing with Europe’s high legacy carmakers, Volkswagen warned on Monday that it could now not be capable of rule out plant closures in Germany.
The Wolfsburg-headquartered firm additionally mentioned it felt compelled to deliver an finish to its employment safety settlement — a job safety program that has been in place since 1994 — to be able to safe “urgently needed structural adjustments for greater competitiveness in the short term.”
The emblem of German automobile maker Volkswagen (VW) is seen on the entrance of a Volkswagen ID. Buzz Professional electrical van on the Worldwide Motor Present (IAA) in Munich, southern Germany, on September 5, 2023.
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Volkswagen Group CEO Oliver Blume mentioned in a written assertion on Monday that the carmaker would want to “act decisively” to be able to future-proof the corporate.
“The European automotive industry is in a very demanding and serious situation,” Blume mentioned.
“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,” he added.
Volkswagen mentioned that every one vital measures could be mentioned with the Normal Works Council — a bunch of elected workers members that symbolize the pursuits of an organization’s workforce — and with high German industrial union IG Metall. Each teams, which maintain vital affect on the firm, have been sharply vital of the proposals.
Daniela Cavallo of Volkswagen’s Normal Works Council mentioned that the faction would “fight bitterly” in opposition to the potential plant closure measures, whereas a spokesperson for IG Metall described the plan as one which “shakes the foundations of Volkswagen and poses a massive threat to jobs and locations.”
‘A central pillar for development’
Shares of Volkswagen dipped 0.8% at round 2:15 p.m. London time on Tuesday, paring positive aspects from the earlier session. Volkswagen’s inventory value has fallen by greater than 33% over the previous 5 years.
The downturn comes amid a troublesome financial setting for the carmaker and an inflow of latest rivals in Europe, as Volkswagen makes an attempt to outlive the transition to electrical automobiles.
“The situation is extremely tense and cannot be resolved through simple cost-cutting measures,” VW model CEO Thomas Schäfer mentioned on Monday.
“This is why we want to initiate discussions with employee representatives as soon as possible to explore the possibilities for sustainably restructuring the brand,” he added.
Shares of Volkswagen over the previous 5 years.
Volkswagen’s plans to contemplate unprecedented plant closures in Germany comes at a politically fraught time for Europe’s largest financial system. Led by Chancellor Olaf Scholz, the ruling three-way coalition in Berlin was dealt a heavy blow in regional votes over the weekend.
“The German automotive industry stands for globally successful products and innovations. It is a central pillar for growth and prosperity in Germany,” a German authorities spokesperson advised CNBC by e-mail, with out commenting particularly on Volkswagen’s deliberate measures.
“At the same time, it is currently in a challenging phase of transformation towards electromobility. This also requires the adaptation of traditional structures and measures for greater competitiveness,” the spokesperson added, in keeping with a Google translation.
“A close social partnership is a hallmark of the German automotive industry. The Federal Government therefore appeals to the social partners involved to continue to fulfil this responsibility in the future.”
Thomas Besson, head of automotive analysis at Kepler Cheuvreux, mentioned the issues at Volkswagen replicate an “industry-wide story.”
“We are seeing a major fragmentation story of the global automotive landscape,” Besson advised CNBC’s “Street Signs Europe” on Tuesday.
“The situation … is also specific to Volkswagen, in the sense that they have put in place a number of guarantees for workers,” he added.
— CNBC’s Annette Weisbach contributed to this report.