The VW factory in Wolfsburg, Germany. (Kriztian Bocci/Bloomberg)
key takeaways:
- Volkswagen labor leaders, led by Daniela Cavallo, protested against plans for massive job cuts and factory closures at a major supervisory board meeting in Wolfsburg.
- The dispute reflects pressure to cut costs amid weak profits in China and higher German operating costs, with reports suggesting that 100,000 jobs could be eliminated.
- Any restructuring faces opposition from unions and state stakeholders, with protests ongoing and supervisory board approval required to close the plant.
Volkswagen AG’s influential labor leaders vowed to fight plans for massive job cuts and factory closures in Germany, as key investors and stakeholders gathered for a close meeting of the supervisory board.
“Our workers did not cause this crisis,” Daniela Cavallo, head of VW’s powerful works council, said at a protest attended by several hundred workers at the German company’s headquarters in Wolfsburg. “Management should do their homework, politicians too, when we are already ready to do ours.”
Europe’s biggest automaker is under intense pressure to cut costs and improve efficiency, reviving tensions between management and labor leaders, who have sweeping powers to push back against decisions they disagree with.
Profits have declined in China, VW’s biggest market, and top executives, led by CEO Oliver Blume, have called for measures to boost competitiveness. These specifically target German operations, where energy and labor costs are high.
VW said in a statement that management and the supervisory board “share concerns” about the group’s future. “That’s why management has developed a comprehensive future plan with the goal of making VW and all of its brands and units faster, stronger and more competitive,” the company said.
Germany’s largest labor union, IG Metall, is protesting on July 9 in more than a dozen locations across the country, including Stuttgart and Ingolstadt, where the group’s Porsche and Audi brands are based. The group’s lump sum profit also declined due to weak Chinese demand and the impact of trade tariffs.
A few hours before the meeting, pressure on labor representatives intensified. Der Spiegel magazine reported that an internal VW document envisaged the closure of four factories, including Audi’s Neckarsulm plant, between 2031 and 2034.
Audi management has insisted on discussing use of the site with labor officials, according to people familiar with the matter. Worker officials have been reluctant to consider proposals involving southern German defense companies seeking additional manufacturing capacity, said the people, who spoke on condition of anonymity discussing confidential plans.
Officials in the federal state of Lower Saxony, which holds a 20% stake in VW, giving it some veto rights, are ready to agree to new uses of the factories, such as by defense contractors, Wirtschaftswoche reported on July 9, citing unnamed board representatives. According to the magazine, they could also envisage ending production at some sites by not specifying new models.
The latest media reports build on earlier proposals that had already alarmed labor leaders. Manager magazine said last month, citing plans to be presented at a July 9 meeting, that VW could double planned job cuts to 100,000 and close four plants in Germany.
Labor leaders criticized management for poor decisions regarding the industry’s shift toward software-centric and electric vehicles.
“It’s irresponsible how people’s future is being played with,” IG Metall chairwoman Christiane Benner said during the Wolfsburg protests.
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Any decision on further cuts would face serious internal obstacles. Steps such as closing a factory require approval from the supervisory board, where worker representatives hold half the seats. Their power is boosted by the two additional seats held by Lower Saxony, which generally favors Labour.
The region is home to major VW sites, including its massive Wolfsburg headquarters. On that site alone, Germany’s most important industrial company employs approximately 70,000 people.
Other board seats are held by the billionaire Porsche and Piech families and the Qatar Investment Authority.
“We know we are in a crisis,” Cavallo said at the demo. “And it’s certainly not just Volkswagen, but the entire automotive industry.”
