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Volkswagen Faces Worker Uproar Over €10 Billion Cost-Cutting Plan

Volkswagen is grappling with intense employee unrest following the announcement of a sweeping €10 billion cost-cutting strategy that includes factory closures.

Volkswagen Faces Worker Uproar Over €10 Billion Cost-Cutting Plan

Volkswagen’s management faced intense criticism from workers on Wednesday as they unveiled a €10 billion cost-cutting plan, which includes factory closures and significant reductions. The announcement has caused a rift between the company and its employees, with many of the 16,000 workers gathered at the Wolfsburg headquarters expressing their anger by chanting “we are Volkswagen, you are not” and “auf Wiedersehen.”

Finance chief Arno Antlitz addressed the crowd, explaining that the European car market had contracted significantly following the COVID-19 pandemic, resulting in a shortfall of around 500,000 vehicles—equivalent to the production capacity of about two factories. Antlitz emphasized the need for cost-cutting to navigate the shift towards a fleet primarily composed of electric vehicles.

However, workers, led by works council chief Daniela Cavallo, accused Volkswagen Group CEO Oliver Blume of undermining German jobs in favour of a €5 billion software deal with US firm Rivian. Cavallo criticized the management’s approach as a “declaration of bankruptcy” and demanded that Blume defend his decisions.

The conflict at Volkswagen reflects broader issues facing the German economy, including stagnant growth, inflation, and increased competition from abroad. The German government, led by Chancellor Olaf Scholz, has made Volkswagen a top priority, with plans to address these economic challenges through tax reductions aimed at boosting demand for electric vehicles.

Volkswagen’s cost-cutting measures also involve ending a long-standing job security agreement at six of its factories. The company aims to achieve a 6.5% profit margin by 2026, a significant increase from the 2.3% margin recorded in the first half of 2024.

 

 

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