Volkswagen has confirmed plans to eliminate 35,000 jobs in Germany by 2030, following a cost-cutting agreement with unions. This decision, resulting from extensive negotiations with labour representatives, will save the automaker approximately four billion euros ($4.2 billion) annually.
The powerful IG Metall union endorsed the agreement, celebrating the significant achievement of preventing forced layoffs and plant closures. This deal ended the possibility of strikes and came as a relief just before Christmas.
Initially, Volkswagen had contemplated closing production sites in Germany, a move unprecedented in its 87-year history. The Volkswagen brand, which employs about 120,000 workers in Germany, faces urgent challenges, particularly with the shift to electric vehicles and increasing competition from Chinese firms like BYD and Geely.
Thorsten Groeger from the IG Metall union confirmed, “There will be no plant closures.” However, production at Volkswagen’s smallest factory in Dresden will cease by the end of 2025. The company is developing an alternative concept for this site with about 300 employees.
In Osnabrueck, where around 2,300 people are employed, production will continue until mid-2027 before the site transitions to other uses. Additionally, Volkswagen plans to move production of its popular Golf model from Wolfsburg, Germany, to a factory in Mexico.
Volkswagen brand CEO Thomas Schaefer says the company has reduced its technical capacity at German sites by over 700,000 vehicles. He noted that the agreement with unions would make development and labour costs more competitive.
Volkswagen to cut more than 35,000 jobs in Germany by 2030 https://t.co/I6ID26ssna pic.twitter.com/yfHNIU49DC
— Reuters (@Reuters) December 20, 2024“These are tough decisions but also important decisions for the future,” Schaefer said. The plan includes 1.5 billion euros of savings from reduced labour costs and a gradual reduction in the workforce. The agreement also includes a wage freeze for 2025 and 2026 and spreads previously agreed bonuses over several years.
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Volkswagen’s financial struggles, highlighted by a 64% drop in third-quarter profit, reflect broader economic challenges in Germany. With the nation facing high energy prices and potential economic contraction, the crisis at Volkswagen has drawn political attention, especially with impending early elections on February 23.
Chancellor Olaf Scholz has emphasized the importance of avoiding factory closures, pointing out that poor management decisions have exacerbated the company’s issues. As the elections approach, the future of Volkswagen remains a pivotal topic in national discussions.
