Volkswagen confirms the first major staff reduction in Germany in 89 years

BarcelonaThe Volkswagen Group confirms its first major workforce reduction in Germany since its founding 89 years ago. After the automotive company announced its plans to reduce at least 100,000 jobs globally, all bad omens were confirmed this Tuesday, especially for the company's workers in the Germanic country. The company will dispense with approximately 50,000 employees in Germany, its main production center with a dozen plants and more than 250,000 workers.

This was expressed by the group's CEO, Oliver Blume, in a speech he gave to several employees at the Wolfsburg plant, the largest for the car manufacturer. The executive justified the need to implement these measures to confront its competitors, mentioning that the German group's fixed costs are 30% higher than its rivals'. "Our future plan is the largest transformation program in the history of our company," he pointed out, calling the current situation a "historic crossroads".

"If we continued as we are in Germany, we would face a permanent disadvantage of about 1.5 billion euros annually," continued Blume, who has received criticism from the chairwoman of the works council, Daniela Cavallo, and also from the president of the federal state of Lower Saxony – where Wolfsburg is located and Volkswagen is headquartered – the Social Democrat Olaf Lies, for the announcement.

Symbolism

Germany has been the locomotive of Europe and, despite the economic slowdown of recent years, it continues to be its main economy. In this context, Volkswagen – the largest car manufacturer on the Old Continent – is one of its most relevant assets. At the same time, however, the car manufacturer has also fallen prey to some of the ills that have led the European Union to rethink its growth model.

After the reputational crisis derived from Dieselgate, Volkswagen has been eclipsed by the competition from Chinese brands such as BYD, Omoda or MG. The company also faces a problem of overcapacity and the challenge of electrification, a process that, for the moment, is turbulent. In this regard, the car manufacturer decided, at the end of last year, to close its first factory in Germany due to low demand for electric cars. It was the Dresden plant, a facility where the electric vehicle ID.3 was made and which did not fully catch on.

In addition to the Dresden factory, the restructuring plan also includes the closure of four more plants in the group, three from the Volkswagen brand and one from the Audi brand.

Impact on Seat

At this time, it is not known with exactitude what the impact of the cutback will be on the rest of the territories where the company operates. Around the world, the group has 111 production plants distributed in 26 countries and employing around 650,000 workers. The latest statements from Volkswagen – Seat's parent company – reiterated their commitment to the Martorell plant, one of the group's main ones in Europe in terms of production. However, and taking into account the high volume of cutbacks to be carried out, the concern remains. According to company sources contacted by ARA, there is a feeling among the staff that the impact will be there, either directly or indirectly.