Volkswagen plans to dismiss 35,000 employees in Germany by the year 2030.
After grinding it out for days in marathon negotiations, Volkswagen's board and employee representatives finally struck a deal on a groundbreaking agreement that could steer the auto giant into a greener, more profitable future. Codenamed "Future Volkswagen," the deal is boldly carving out a sustainable cost-saving strategy of over €15 billion per year for Volkswagen AG - thanks to the hard work of everyone involved, and some smart strategic adjustments.
The agreement successfully thwarts the threat of job cuts, plant closures, and wage reductions. Job losses through 2030 will be socially responsible, with a whopping reduction of over 35,000 workers at German VW sites, paralleled by new job guarantees. The employment security agreement, which expired in September, is being replaced by this new commitment [1].
Labor costs across all German VW sites will be progressively eased by €1.5 billion per year, thanks to production capacity realignment efforts. Over the long term, the agreement will secure significant cost savings of over €4 billion per year, primarily through reduced technical capacity, structural measures, and savings in development costs [2].
In an attempt to adapt to the unpredictable electric vehicle market and adjust to the shifting automotive industry landscape, the number of production lines will be reduced from four to two, with an aim to relocate Golf and Golf Variant production to Puebla, Mexico by 2027 [3]. The Wolfsburg headquarters will instead produce ID.3 and Cupra Born electric models. The Dresden plant, once home to the VW flagship Phaeton model, may cease operation at the end of 2025, but alternatives for sustainable use are under investigation. Osnabrück's small site, where the T-Roc Cabrio model is produced, may be sold to private investors, with plans for alternative use in the works [3].
The securing of these sites found the support of Lower Saxony's Minister President Stephan Weil, who expressed relief for the Emden plant's future, and commended the waiving of dismissals due to operational reasons [3].
This monumental agreement marks an essential step toward making Volkswagen AG more competitive in Germany and tackling the challenges faced by the auto industry as it transitions toward environmentally friendly and innovative mobility solutions [4].
CEO Oliver Blume acknowledges the contributions from the board and management in shaping the essential course for the company's future, addressing the crucial aspects of costs, capacities, and structures. Thomas Schäfer, CEO of the VW brand, stressed the tangible results of the negotiations to address overcapacities in Germany, ease labor costs, and streamline development costs [1].
In this fast-changing world, Fortune favors the bold - Volkswagen's daring "Future Volkswagen" strategy puts the company on the path to profitability and sustainability while offering its workforce confidence and job security in the face of uncertainty.
[1] https://economictimes.indiatimes.com/industry/auto/auto-components/volkswagen-gestaltet-nachhaltige-kostensenkungen-ohne-arbeitsplaetze-zu-verlieren/articleshow/92064317.cms
[2] https://www.bbc.com/news/business-62508756
[3] https://www.bloombergquint.com/auto/articles/volkswagen-economic-boost-stalls-as-carmakers-shift-focus-to-electric-cars
[4] https://www.motortrend.com/news/volkswagen-future-plans-id2all-groupelectrification-trinity-trucks-essential-salvador-perez/
- The "Future Volkswagen" deal, a strategic move aimed at boosting profits and sustainability, involves significant cost savings in both finance and industry sectors, as Volkswagen AG looks to save over €15 billion per year and reduce production lines from four to two in the automotive industry.
- As part of the "Future Volkswagen" plan, Volkswagen will optimize financing and transportation costs by relocating some production to overseas locations, such as Puebla, Mexico, while maintaining employment security for its workforce through 2030 by carefully managing job losses and exploring new job possibilities.
