Workers of German carmaker Volkswagen (VW) protest at the start of a company’s general meeting in Wolfsburg, northern Germany, on September 4, 2024.
Moritz Frankenberg | Afp | Getty Images
Management at German auto giant Volkswagen is set to meet workers on Wednesday as senior business leaders prepare to outline details of potential cuts that could include historic domestic plant closures.
Volkswagen warned on Monday that it was no longer in a position to rule out plant closures in its home country of Germany – a measure previously considered off the table and never taken in the company’s records.
The carmaker also said it believed its job protection agreement, which has been in place since 1994 and protects the workforce in Germany until 2029, may have to end.
Speculation about the closure of Volkswagen stores in Osnabrueck, Lower Saxony, and Dresden, Saxony, increased on Tuesday.
Volkswagen’s works council, which is made up of staff members elected to represent workers’ interests within the company, and Germany’s major industrial union IG Metall have strongly criticized the plan and announced they would work against it.
Workers at German carmaker Volkswagen (VW) wait for the start of a company’s general meeting in Wolfsburg, northern Germany, on September 4, 2024.
Moritz Frankenberg | Afp | Getty Images
Daniela Cavallo, a top spokeswoman for Volkswagen’s General Works Council, said earlier in the week that the group would put up “fierce resistance” against the plans, according to a translation by CNBC. There had been an understanding for decades that profitability and job security were equal goals, but the company had now decided to end that arrangement, he said.
The most important thing now was to have a picture of the future and know where the business is headed, Cavallo added.
German media also reported that he said he expected Wednesday’s town hall to be fully attended and for workers to make their frustrations known loudly that day.
Philippe Houchois, head of global autos at Jefferies, told CNBC’s “Squawk Box Europe” on Monday that Volkswagen CEO Oliver Blume will try to soften resistance against the potential plans.
“Blume is a different breed than his predecessor. He is probably more experienced and will see to what extent he can, change some of the resistance, adapt to Volkswagen,” he said.
Houchois also said Volkswagen management and employee representatives may not be so far apart when it comes to the basics, based on their comments in recent days.
“It’s a question of how they’re going to come to an agreement or the process to actually work together, but the end game seems to be understood by both sides,” he said.
Volkswagen’s potential issues come at a difficult time for both the broader German economy and the country’s auto industry in particular, as a series of challenges weigh on the sector.
On Wednesday, the Ifo institute reported that business sentiment in the German auto industry weakened again in August, falling to negative 24.7 points from the previous month’s negative counterpart of 18.5 points. Business expectations for the next six months were “extremely pessimistic”, Ifo said.
