Photo: Bloomberg
German carmaker Volkswagen AG is defending its plans to potentially close factories in Germany, saying that the company has about two redundant plants due to declining sales. This decision became part of the company’s broader strategy aimed at increasing efficiency and reducing costs. This is reported by Bloomberg.
Justification of the decision
Volkswagen’s chief financial officer, Arno Antlitz, explained that demand in Europe has not recovered since the pandemic, and car sales in the region remain significantly lower than before the crisis. This resulted in the company losing around 500,000 cars a year, which is equivalent to operating roughly two factories. Antlitz emphasized the need to increase productivity and reduce costs.
Daniela Cavallo, right, with IG Metall union manager Thorsten Groger on September 4. Photo: Moritz Frankenberg/AFP/Getty Images
Confrontation with trade unions
The proposal to close factories in Germany caused considerable concern among workers and trade unions. At a meeting at Volkswagen’s main factory in Wolfsburg, more than 16,000 workers expressed their protest against the plant closures, holding placards and chanting slogans to protect their jobs. Some union representatives, including Daniela Cavallo, said they would fight against any closure, stressing that workers should not suffer because of management mistakes.
Volkswagen factories in Germany. Photo: Volkswagen
Financial difficulties and prospects
Despite the cost-cutting plans, Volkswagen still needs to find 3 billion euros to meet its 10 billion-euro efficiency program agreed last year. According to company officials, labor costs are only part of the problem that has affected Volkswagen’s finances.
Economic context
The European car market is facing a slowdown in the transition to electric cars due to reduced government incentives and lower sales. That complicates the situation for manufacturers such as Volkswagen, Stellantis NV and Renault SA, which are operating at levels that analysts consider unprofitable.
