Volkswagen (VW) management and union leaders maintained opposing stances on Wednesday regarding a proposed restructuring plan for the European automaker. CEO Oliver Blume stated that deeper cost reductions are necessary to remain competitive, while labor representatives expressed firm opposition to potential layoffs and factory closures. The disagreement comes as the company prepares for a supervisory board meeting scheduled for September 4 to discuss its turnaround strategy.
The company is currently evaluating measures that include doubling the number of job cuts, closing factories, and carving out specific divisions. These considerations follow management's assessment of profitability and increased competition from Chinese manufacturers. Blume has been visiting various Volkswagen sites this week to advocate for the plan, though he has characterized plant closures as a measure of last resort.
During a visit to the Emden electric vehicle plant on Wednesday, Blume told staff that the company's labor costs are more than double those of comparable locations in Europe. He noted that other plants are significantly cheaper in terms of factory costs and stated that Volkswagen must measure its performance against the most efficient sites in the region. The Emden plant is one of four locations that currently lacks a formal business plan beyond the year 2030.
Daniela Cavallo, head of Volkswagen's works council, addressed reporters at the Osnabrueck plant to voice labor's objections. She argued that layoffs and site closures are not the solution to the company's current challenges, which she attributed to tariffs, competition from Chinese automakers, and a weak European market. Cavallo stated that a vision for the company's future must involve elements beyond labor costs and staff reductions.
The financial scale of these changes is linked to the company's attempt to bridge a gap where labor costs at German plants are reported to be more than 100% higher than those of European competitors. If the proposed cuts and closures proceed, employees would likely see a transition toward new industrial solutions or potential severance packages as the company shifts its focus toward competing with lower-cost Chinese rivals. The loss of these manufacturing sites would also impact the tax revenue and economic stability of the state of Lower Saxony, which holds a significant stake in the company.
The conflict sets a precedent for how traditional European automakers navigate the transition to electric vehicles while facing high domestic costs. The outcome of the September 4 supervisory board meeting will be a critical indicator of whether management can secure the support of labor representatives and state officials, who currently hold a majority on the board. A final decision on specific site closures and the scale of job losses will likely follow that meeting, determining the company's operational footprint through 2030 and beyond.