A worker at the Zuffenhausen plant in Stuttgart corrects the name on a Porsche 911 ST. (Kriztian Bocci/Bloomberg)
key takeaways:
- Porsche agreed with labor officials to eliminate 5,000 jobs through attrition, retirements and voluntary departures by 2035, avoiding mandatory layoffs.
- The deal comes as Volkswagen and Porsche face falling demand in China, weak electric-vehicle sales and pressure to cut costs and improve profitability.
- Porsche will extend security for its German sites until 2035 and invest €2.1 billion in the Zuffenhausen and Weissach operations.
Porsche AG agreed to eliminate 5,000 jobs by 2035 under a deal with labor authorities that protects its main German sites and rules out mandatory redundancies.
Porsche and its general works council said on July 27 that the positions would be cut through a mix of natural attrition, extended partial-retirement programs and voluntary separation agreements. Employment and site security in Zuffenhausen and Weissach will be extended until the end of 2035.
The deal underlines growing pressure on Porsche’s parent company Volkswagen AG, which warned last week that group revenue could fall by as much as 3% this year as the recession in China deepens.
VW has many underutilized factories, its costs are about 30% higher than some competitors and it needs to cut at least 10 billion euros ($11.4 billion) more in overhead expenses.
Porsche, once Volkswagen’s most reliable profit engine, has been hit particularly hard by a decline in Chinese demand for German luxury cars and weaker-than-expected sales of electric models including the Taycan. The sports car maker is also cutting costs and rethinking its product strategy after a sharp decline in profitability.
The latest agreement follows an earlier plan to reduce Porsche’s workforce by about 3,900 by the end of the decade, including 2,000 temporary employees. The company, which employs about 40,000 people, has promised to remove some management layers, simplify its organization and reduce research and development spending.
The new deal includes a €2.1 billion investment in Zuffenhausen and Weissach as part of an effort to boost its German operations.
