Volkswagen may have to close plants in Germany for the first time in its 87-year history and renege on a no-layoff pledge that was supposed to last until 2029.
The “urgently needed structural adjustments” were due to stiffer competition especially in the electric car market, and at least two outdated factories, officials said, Reuters reported. Competition in the electric-vehicles market from China was also a factor.
“The European automotive industry is in a very demanding and serious situation,” Volkswagen Group CEO Oliver Blume said Monday in a statement. The advent of new competitors in Europe’s markets, combined with Germany’s loss of manufacturing cachet pointed to a need to “act decisively,” Blume said in the statement obtained by The Associated Press.
While cost-cutting measures were having an impact, it was not enough because the “headwinds have become significantly stronger,” said Thomas Schaefer, CEO of the Volkswagen Passenger Cars division. “The situation is extremely tense and cannot be resolved through simple cost-cutting measures.”
Schaefer and Arno Antlitz, the company’s chief financial officer, were scheduled to meet with staff Wednesday morning, Reuters reported. Daniela Cavallo, a member of the powerful IG Metall union and head of Volkswagen’s works council, promised that meeting would be “very uncomfortable” for management, according to Reuters.
With News Wire Services
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