Volkswagen Mulls Factory Closures in Germany Amid Asian Competition Pressure
Volkswagen, Europe's top carmaker, is facing tough decisions as it considers shutting down factories in Germany for the first time. The move is a result of the intense competition from cheaper Asian rivals, putting pressure on Chief Executive Oliver Blume to make significant changes.
The potential closures have sparked a clash between Blume and powerful unions within Volkswagen, known for their influence. The company is eyeing one large vehicle plant and a component factory in Germany as obsolete, prompting resistance from the works council.
Analysts have identified sites in Osnabrueck and Dresden as possible targets for closure. Lower Saxony, the second-largest shareholder in Volkswagen, has shown support for the review. Additionally, Volkswagen plans to end its job security program, established in 1994, to navigate through the challenges it faces.
To address the changing landscape of the automotive industry, Volkswagen's brand chief, Thomas Schaefer, emphasized the need for cost-cutting measures and a shift towards electric vehicles. The company aims to save 10 billion euros by 2026 through a restructuring plan.
The announcement of the potential closures has caused a stir in the financial market, with Volkswagen's shares seeing a 2.57% increase following the news. Despite this, the company has experienced a significant decline in stock market value over the past five years.
The decision to consider plant closures has been criticized by the IG Metall union, calling it irresponsible and a threat to Volkswagen's foundation. Works council chief Daniella Cavallo urged the management to focus on reducing complexity and leveraging synergies within the company.
Overall, Volkswagen's potential factory closures reflect the challenges faced by traditional automakers in adapting to a rapidly changing industry. The decisions made by the company can impact its employees, shareholders, and the future of the automotive sector as a whole.