Union warns of ‘conflict’ as Volkswagen eyes mass job cuts

Volkswagen has come under intense pressure from US tariffs, slimmer profit margins from electric cars and, above all, intense competition in China. (EPA Images pic)

WOLFSBURG: Volkswagen workers staged protests nationwide Thursday as unions warned of a “major conflict” if the struggling German car giant pushes ahead with what could be the global auto industry’s biggest restructuring.

Europe’s largest carmaker has come under intense pressure from US tariffs, slimmer profit margins from electric cars and, above all, intense competition in China, the world’s largest auto market.

Thousands of job cuts have already been announced, but reports say CEO Oliver Blume is now weighing ramping these up to 100,000 as well as potentially closing four factories in Germany.

As VW’s bosses presented their planned overhaul to the 10-brand group’s supervisory board, workers staged protests outside plants and unions warned they were ready to step up industrial action.

“Whoever takes on the workers is risking a major conflict,” Thorsten Groeger, an official from union IG Metall, told reporters at VW’s headquarters in the city of Wolfsburg.

“We will not stand by and do nothing if the company does not change course.”

At one of the factories said to be earmarked for closure in the eastern German city of Zwickau, about 200 workers joined a demonstration, including one dressed as the grim reaper.

“This site will not be closed, not against our will – we will defend it,” union official Thomas Knabel told the crowd, who waved banners that read: “United, fighting for our future”.

‘Dramatic situation’

“If the plant were to be shut down, it would be the death blow for the region,” Denise Tschiersch, who has worked at the factory since 1997 and sits on its works council, told AFP.

“This really is a dramatic situation.”

Volkswagen confirmed late Thursday it had presented its plans to the supervisory board, consisting of a package of 12 measures.

These include reducing production capacity to nine million vehicles a year, from 10 million currently, and cutting the range of models it produces by up to 50%, VW said in a statement.

It made no mention, however, of potential job cuts or factory closures.

“We are making the Volkswagen Group faster, more robust and more competitive,” said Blume.

VW’s works council, an elected body representing staff interests, accused management of failing to provide sufficient information to staff and demanded that Blume “comment unambiguously” on Friday on the speculation about job cuts.

“The way the board is treating the workforce is the height of disrespect,” said works council chief Daniela Cavallo.

Worsening outlook

VW, whose brands range from mass-market SEATs to premium Porsches, had previously announced plans to axe up to 50,000 jobs in Germany, including 35,000 at its namesake marque.

But the outlook has since worsened considerably, VW’s bosses say, prompting them to seek far deeper cuts and factory closures.

Management are also reportedly seeking to spin off the Volkswagen brand as a separate company, which unions fear is a bid to undermine existing protections for staff.

If the new plans are pushed through, it would amount to a roughly 15-percent reduction in VW’s global workforce and would eclipse all other major job-cutting drives in the auto industry.

This notably includes Detroit-based General Motors’ move to cut almost 50,000 jobs in 2009 as it declared bankruptcy.

The whole German auto industry – including VW’s peers BMW and Mercedes-Benz with their suppliers – has been struggling in recent years, with job cuts and overhauls increasingly common.

Challenges in key international markets have ramped up the pressure on Volkswagen.

US President Donald Trump’s tariff blitz is costing VW billions of euros a year while the carmaker is losing ground in China to local rivals, particularly when it comes to electric vehicles.

It could be tricky to push through such a sweeping overhaul at the 89-year-old group, however.

VW has a complex ownership model, with the state of Lower Saxony – home to Wolfsburg and six VW plants – holding a substantial stake that gives it the power to block decisions.