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Volkswagen stands by German factory closure plan

November 24, 2024

Volkswagen executive Thomas Schäfer said the company needs to adjust to "new realities" as it intends to shut down German factories and cut jobs. The IG Metall trade union is set to strike next month over the plan.

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A red light flashes near Volkswagen's factory in Osnabrück on November 6
Volkswagen says low European car demand and high labor costs are some of the reasons for its restructuring Image: Hauke-Christian Dittrich/dpa/picture alliance

Volkswagen Passenger Cars CEO Thomas Schäfer told the German Welt am Sonntag newspaper that the car giant will push forward with its factory closure plans despite criticism from unions. 

Schäfer says Volkswagen must 'adjust to new realities'  

"We need to reduce our capacities and adjust to new realities," Schäfer said.  

In October, the company's works council said the auto firm would close three factories, resulting in thousands of job cuts.

When asked by Welt am Sonntag whether the company could forgo one of the closures, Schäfer replied: "We do not currently see this."  

Volkswagen Passenger Cars CEO Thomas Schäfer speaking in 2021
Schäfer has been the CEO of Volkswagen Passenger Cars since July 2022Image: Michaela Rihova/dpa/CTK/picture alliance

The Volkswagen executive also stood by plans to lay off workers, saying it would "not be enough" to downsize the workforce using early retirements and severance offers. 

"That would simply take too long," Schäfer said. He believes the downsizing plans would take three to four years.

"There is no point in dragging out a restructuring until 2035. The competition would have left us behind by then," Schäfer said.  

The Volkswagen executive said the company is facing higher labor costs in comparison with competitors. He also agreed that management should take salary cuts, one of the demands of the trade union IG Metall during negotiations.   

German automaker Volkswagen faces unprecedented crisis

IG Metall union aims to put Volkswagen bosses 'under massive pressure'

Volkswagen labor representatives have backed limited strikes at German facilities from early December. IG Metall said the action would put Volkswagen "under massive pressure."

IG Metall negotiator Thorsten Gröger said the idea of plant closures and mass layoffs as proposed by management "is now leading to the threat of a labor dispute the intensity of which the country has not seen for a long time." 

IG Metall negotiator Thorsten Gröger
IG Metall negotiator Thorsten Gröger has decried VW's plans as a "stab in the heart" of the company's workforce Image: Alicia Windzio/dpa/picture alliance

Germany's powerhouse auto sector is facing a crisis amid declining European demand and tough competition from China. 

The slowdown also impacted other companies involved in the German auto industry..

On Friday, German auto parts supplier Bosch said it would let go 5,000 employees, with most of the layoffs occurring in Germany.

ZF Friedrichshafen, Continental AG, and Webasto Group are some of the other German auto part supply companies which have announced job cuts recently. 

German automobile industry faces a looming recession

wd/lo (AFP, dpa)