Picture Alliance | Picture Alliance | Getty Images German automotive giant Volkswagen is bracing for a showdown with trade unions shortly after it said it cannot rule out shutting factories in its home country for the first time in its nearly 90-year history.
A spokesperson for Volkswagen was not immediately available to comment when contacted by CNBC on Tuesday.
In a move that underlines the challenges facing Europe’s top legacy carmakers, Volkswagen warned on Monday that it would no longer be able to rule out plant closures in Germany.
Stock Chart IconStock chart icon Volkswagen’s plans to consider unprecedented plant closures in Germany comes at a politically fraught time for Europe’s largest economy.
“The German automotive industry stands for globally successful products and innovations.
It is a central pillar for growth and prosperity in Germany,” a German government spokesperson told CNBC by email, without commenting specifically on Volkswagen’s planned measures.
This also requires the adaptation of traditional structures and measures for greater competitiveness,” the spokesperson added, according to a Google translation.
“A close social partnership is a hallmark of the German automotive industry.
Thomas Besson, head of automotive research at Kepler Cheuvreux, said the problems at Volkswagen reflect an “industry-wide story.”
“The situation … is also specific to Volkswagen, in the sense that they have put in place a number of guarantees for workers,” he added.
Picture Alliance | Getty Images | Picture Alliance.
After stating that it cannot rule out closing factories in its home country for the first time in its nearly 90-year history, the German automaker Volkswagen is preparing for a confrontation with trade unions.
At a town hall meeting on Wednesday morning in Wolfsburg, the management of Volkswagen is anticipated to present its plans to roughly 18,000 employees. There have been rumors that the automaker may attempt to close locations in Dresden, Saxony, and Osnabrueck, Lower Saxony.
When CNBC contacted a Volkswagen representative on Tuesday, the representative was not immediately available to comment.
Volkswagen warned on Monday that it would no longer be able to rule out plant closures in Germany, a move that highlights the difficulties facing the continent’s leading legacy automakers.
In addition, the Wolfsburg, Germany-based company stated that it was forced to terminate its employment protection agreement, which has been in effect since 1994, in order to obtain “urgently needed structural adjustments for greater competitiveness in the short term.”. “.”.
Christof Stache | AFP | Getty Images.
In order to future-proof the company, Oliver Blume, CEO of Volkswagen Group, stated in a written statement on Monday that the automaker would have to “act decisively.”.
According to Blume, “the European automotive industry is in a very demanding and serious situation.”.
In addition to new competitors joining the European market, the economic climate grew even more difficult. Furthermore, he continued, “Germany in particular is lagging behind other manufacturing locations in terms of competitiveness.
Volkswagen stated that all relevant actions would be reviewed with the leading German labor union, IG Metall, as well as the General Works Council, a body of elected employees that represents the interests of an organization’s workforce. The proposals have been met with harsh criticism from both influential groups within the company.
A representative for IG Metall stated that the proposal “shakes the foundations of Volkswagen and poses a massive threat to jobs and locations,” while Daniela Cavallo of Volkswagen’s General Works Council stated that the faction would “fight bitterly” against the potential plant closure measures. ****.
“A key component of growth”.
Volkswagen’s stock fell 0.8 percent at 2:15 p.m. m. Tuesday, paring gains from the previous session, London time. Throughout the last five years, Volkswagen’s stock price has decreased by over 33%.
In an effort to weather the transition to electric vehicles, Volkswagen is facing a challenging economic climate in addition to a wave of new competitors entering the European market.
Thomas Schäfer, CEO of the VW brand, stated on Monday that “the situation is extremely tense and cannot be resolved through simple cost-cutting measures.”.
He continued, “This is why we want to start talking with employee representatives as soon as possible to explore the possibilities for restructuring the brand in a way that is sustainable.”.
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Volkswagen’s intention to explore historically high plant closures in Germany coincides with a politically sensitive period for the continent’s largest economy. The three-way coalition in power in Berlin, led by Chancellor Olaf Scholz, suffered a severe defeat in regional elections this past weekend.
“Globally successful products and innovations are synonymous with the German automotive industry.”. Without addressing VW’s proposed actions in particular, a German government spokesman sent CNBC an email saying, “It is a central pillar for growth and prosperity in Germany.”.
It is presently going through a difficult phase of change toward electromobility at the same time. A Google translation of the statement from the spokesperson stated, “This also necessitates the adaptation of traditional structures and measures for greater competitiveness.”.
“A German automobile company’s hallmark is a close social partnership. Therefore, the Federal Government makes a request to the concerned social partners to carry out this duty going forward. “.
According to Thomas Besson, head of automotive research at Kepler Cheuvreux, Volkswagen’s issues are part of a “story that spans the industry.”. “. .
“The global automotive landscape is fragmenting significantly,” Besson said on Tuesday on CNBC’s “Street Signs Europe.”.
“VW has implemented several worker guarantees, so the situation is unique to the company,” he continued.
This story was enhanced by Annette Weisbach of CNBC.
