Volkswagen is sticking to its plans for factory closures in Germany even though the union has voted to go on strike in early December.
“We need to reduce our capacities and adjust to the new realities,” chief executive officer of the VW brand, Thomas Schäfer, told Die Welt newspaper in an article published on Saturday.
Included in the cost-cutting moves were component locations and vehicle plants. When asked if VW could forgo shutting a factory, Schäfer said, “We do not currently see this.”
Schäfer did not rule out the threatened redundancies either. Trimming the work force via retirements and severance offers “will not be enough” and would take too long, he said.
Schäfer thinks the reorganization should be done in three to four years to reposition the Volkswagen brand.
“There is no point in dragging out a restructuring until 2035. The competition would have left us behind by then,” he said.
The aim is to return Volkswagen to the time of the mass-market passenger car segment, which Schäfer said will require placing Volkswagen on stable economic footing.
“Specifically, our capacities in Europe are too high. They were planned for a market of around 16 million vehicles per year, but now the car market in Europe has shrunk to 14 million,” he said.
At the same time, VW is struggling with structural disadvantages in Germany including in labour costs. Schäfer said VW’s labour costs in Germany are about twice as high as competitors – and as the company’s own plants in southern and eastern Europe.
VW agrees with union’s demand for management salary cuts
If the two sides reach a collective bargaining agreement, then for him “it includes the board and management contributing,” he said. He stated that since January, the fixed salary of the board has been reduced by 5%, and the management is also forgoing an inflation adjustment of €1,000 ($1,042) and a 3.5% salary increase.
On Friday the collective bargaining committee at the IG Metall trade union gave its approval to the strikes, after another round of wage talks ended in Germany without success on Thursday. The strikes are set to start at the beginning of December.
The chief negotiator for the IG Metall trade union, Thorsten Gröger, did not provide details of when and where strikes would begin. But he threatened to mount a bitter labour struggle against the VW cuts.
“If necessary, it will be a labour dispute the likes of which Germany has not seen for decades,” he said.