Volkswagen clashes with workers over cuts

Volkswagen leaders said the company has “one, maybe two” years to turn its main brand around during a stormy meeting with workers on Wednesday, two days after deep cost-cutting measures and factory closures were announced.

Many of the 16,000 gathered workers began the meeting by whistling and shouting “we are Volkswagen, you are not” and “auf Wiedersehen” as finance chief Arno Antlitz took the stage at the company’s Wolfsburg headquarters.

Antlitz said Europe’s car market had shrunk significantly following the COVID-19 pandemic and that the company was facing a shortfall in demand of about 500,000 vehicles, equivalent to about two factories’ worth.

“The market is just not there,” he told the meeting, saying it was the joint responsibility of workers and management to see through the shift to a fleet of mostly electric cars, which would necessitate cost cutting.

Workers accuse CEO of prioritizing US deal

Works council chief Daniela Cavallo responded that management had “massively damaged trust,” and compared its threat to close plants to a “declaration of bankruptcy.”

She then accused Volkswagen Group CEO Oliver Blume of prioritizing a €5-billion ($5.5-billion) software deal with US firm Rivian over protecting German jobs. Cavallo called on Blume, who was not scheduled to speak, to defend himself.

Larger concerns over German economy

The issues at Volkswagen are symbolic of larger dilemmas facing German businesses. Stagnant growth, inflation, and more competition from abroad have all led to concerns over Europe’s largest economy.

Already reeling from losses in state elections, the governing coalition of Chancellor Olaf Scholz has made Volkswagen a top priority. His cabinet was meeting on Wednesday and was expected to agree to a proposal for tax reductions to boost demand for electric vehicles.

Volkswagen had announced on Monday that it was looking to end a decades-old agreement with workers that guaranteed job security at six of its factories as part of a €10 billion ($11 billlion) cost-cutting plan.

Executives are eyeing a 6.5% profit margin by 2026, a marked increase of the 2.3% seen in the first six months of 2024.