Volkswagen Faces Urgent Cost Cuts Amid Plummeting Earnings and Plant Closures Threat
BERLIN (AP) — Volkswagen has highlighted the urgent need for substantial cost reductions following a 64% drop in its third-quarter net profit, which fell to €1.58 billion ($1.7 billion) from €4.35 billion a year earlier. Revenue remained relatively stable, dipping just 0.5% to €78.49 billion. The announcement came amid tensions with employee representatives regarding potential plant closures in Germany—the automaker’s first since the introduction of a job protection pledge in 1994, which had secured jobs through 2029.
Volkswagen is grappling with significant challenges, including intensified competition from cheaper Chinese electric vehicles and Germany’s stale economic landscape. The company’s chief financial officer, Arno Antlitz, emphasized the "urgent need for action" in a highly competitive environment, stating that current operational costs in Germany are unsustainable.
In light of these financial difficulties, discussions have begun with representatives from the IG Metall industrial union. Union leader Thorsten Gröger called for negotiations aimed at exploring alternatives to plant closures and layoffs. As of now, the company has not revealed specific plans regarding potential locations for closure, but it does face mounting pressures from employees to ensure job security.
Following negotiations held on Wednesday in Wolfsburg, Gröger indicated that while discussions did not collapse, proposals like a 10% salary cut remain unacceptable. Daniela Cavallo, head of the employee council, insisted on developing a comprehensive master plan to safeguard jobs rather than merely addressing labor costs.
Volkswagen employs around 120,000 workforce in Germany across ten plants, with six located in Lower Saxony, including its headquarters in Wolfsburg. As the automaker navigates a challenging road ahead, the outcome of these negotiations will be critical for its future operations and workforce stability.
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