Volkswagen boss warns that plant closures are inevitable as unions begin strike action

2:56 pm, November 25, 2024

The head of Volkswagen has told a German newspaper that he sees no chance of avoiding layoffs and factory closures in its home country.

The move has escalated tensions with unions, who have now for called strike action starting in December.

‘Ultimately, any solution must reduce both overcapacity and costs. We can’t just stick a band-aid on it and keep dragging it along. That would come back to bite us later in a serious way,’ Schaefer told Die Welt am Sonntag. ‘We need to reduce our capacities and adjust to the new realities.’

VW CEO Schaefer said most of the job cuts could be done via natural attrition and early retirement, but that those routes alone would not be enough.

‘It would simply take too long. There is no point in delaying restructuring until 2035. By then, our competition would have left us behind,’ he said, adding VW’s restructuring should rather be done within 3-4 years.

The company has also asked workers at the VW AG unit, which is at the heart of the current conflict, to take a 10% pay cut.

Schaefer added that there was no hope at the moment that demand for new cars in Europe would recover quickly.

Meanwhile, union representatives at the German manufacturing giant have passed forward votes for limited strikes at Volkswagen’s domestic factories from early December, after talks over wages and closures failed to achieve an agreement.

The IG Metall union said the dispute that would ‘put the company under massive pressure’.

The announcement did not say when strikes would start but stated that an agreement preventing walkouts would expire on November 30.

IG Metall negotiator Thorsten Groeger said workers’ representatives had presented proposals, but it was up to VW how long and severe the dispute would be.

‘The company is prepared to negotiate on this basis, but is still keeping open the possibility of plant closures and mass redundancies,’ he said. ‘This is now leading to the threat of a labour dispute, the intensity of which the country has not seen for a long time.’