Volkswagen executives warned angry workers on Wednesday that a drastic fall in sales, equivalent to the output of two plants, means painful cuts are unavoidable if the group is to survive the next two years.
News of looming job cuts – and previously unthinkable factory closures – have struck fear into VW’s German-based workers. About 20,000 of them gathered in the main hall of its Wolfsburg headquarters for a heated showdown with managers on Wednesday.
Many workers, in blue dungarees, held signs reading: “We are Volkswagen, you are not”. Group chief executive Markus Blume countered the hecklers by reminding them he had come to VW as a trainee in 1994.
“The current situation at VW affects us all emotionally, including me personally,” said Mr Blume. “I come from the region, have worked in the group for 30 years and I promise to bring all my experience to VW.”
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In a series of addresses, board members painted an abysmal picture of the group’s immediate future.
Financial chief Arno Antlitz told workers the firm was losing millions on a daily basis and, since the pandemic, had lost about 500,000 sales annually.
“That’s the equivalent of around two plants,” he said. “We need to increase productivity and reduce costs ... and we have one year, maybe two, to turn things around.”
VW brand chief Thomas Schäfer said he needed to find €5 billion to finance “heavy investment” in the company’s future.
“If we now manage to reduce our costs sustainably and invest, then we will have created the conditions for future generations to be able to work for Volkswagen here in Germany,” he said.
VW board members gave no information on Wednesday about which plants might close, insisting that this was a drastic final step if savings were not found elsewhere.
Along with its Wolfsburg headquarters, VW operates five other plants here: in Hanover, Zwickau, Dresden, Emden and Osnabrück. In addition, it operates component factories in Kassel, Salzgitter, Braunschweig and Chemnitz.
Even before details of cost cuts emerge, accusations are flying around Europe’s largest car company.
Analysts accuse VW managers of years of mismanagement, particularly ignoring rising costs and sinking profits in its trademark passenger car brand.
Almost a decade after the diesel fraud scandal, VW’s bumpy transition to electric car production has been complicated by fast-moving competition from Tesla and, increasingly, new competitors from China.
This week’s warnings have set up a complicated four-way standoff between executives, powerful unions and two large shareholders: the state of Lower Saxony and the Porsche-Piech family.
On Wednesday VW general works council chief Daniela Cavallo promised “fierce resistance” to plans she called morally “bankrupt”.
Agreeing that VW faces problems that make reforms necessary, she said company agreements with workers allow such drastic measures “only if the entire business model has died”.
VW’s business model is suffering, she added, because the executive board is “not doing its job” to tackle the “insanity” of complex production, documentation and safety procedures.
German politicians sent mixed signals on Wednesday about their appetite to intervene in the stand-off. The state government of Lower Saxony, which holds a 20 per cent share in VW, insisted it would push to retain all sites in Germany, employing about 100,000 people.
Lower Saxony’s minister president Stephan Weil, who sits on the supervisory board with another political representative, told journalists that he would play a very active role in the upcoming talks and that plant closures were “a last measure”.
A spokesman said Chancellor Olaf Scholz would hold talks with all parties in Wolfsburg but that it was “up to the company to solve the problems and the federal government will not interfere”.
His labour minister, Hubertus Heil, promised to “provide support where necessary” and flagged the possibility of reviving a tax incentive programme to boost demand, this time for electric cars.
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