VW plans factory closures and layoffs amid stiff competition from Asia

CGTN Europe

VW’s chief labor representative says the company is preparing to shut at least three factories in Germany, lay off tens of thousands of workers and reduce its European manufacturing footprint. CGTN’s Trent Murray reports.

Transcript

00:00Pretty bombshell revelations, I think it has to be said.

00:03These warnings are coming from a representative called Daniela Cavallo.

00:07Now, she is effectively the Labor Chief of what is known as the Works Council,

00:12representing workers.

00:13And we know that that council has been locked in talks with Volkswagen's Board of Management

00:19for the past couple of months, following that news in September

00:22that they were looking at making some cuts to their costs.

00:26And what she is saying today is that from those talks,

00:29the employers' union has garnered the knowledge that three factories are planning to be closed

00:35and some of the 300,000 workers that make up the Volkswagen Group here in Germany

00:40could lose their jobs.

00:42She's also saying that Volkswagen overall is looking to reduce its factory footprint within Europe.

00:49Now, the company itself responding to this has given a statement,

00:53saying that indeed cost-cutting measures are being looked at.

00:57But they wouldn't comment on the specifics of what the employers' union is saying.

01:02But what they are saying is that come Wednesday, we will learn some more detail

01:07because that is when the board is due to sit down again with that works council

01:11to discuss some of those measures.

01:13But already some Volkswagen board members have been out in the German media today

01:18saying that right now their cost for making a car in Germany

01:21are around 25 to 50 percent higher than they need to be.

01:25And they say they just simply cannot make money the way things are right now,

01:29which is why some serious discussions need to be had

01:32about where this company can find some savings.

01:35Yeah, and Trent, the coalition government then is appealing for jobs to be safeguarded.

01:40Why is this such a big issue in Germany?

01:44Well, look, I think really when you think about

01:48sort of Germany's famous industrial complex

01:52when it comes to the automotive sector,

01:54you really only think of Volkswagen in many ways.

01:57It is one of the crown jewels.

01:58So for Germans seeing this news tonight on their evening bulletins

02:02that one of the country's most famous companies

02:04is now embarking on this big cost-saving measure,

02:07tens of thousands of potential jobs, factories being closed,

02:10it will be a big shock for people both politically and economically.

02:15We know Chancellor Schultz, of course, is monitoring all of this quite closely.

02:18It will be news he certainly will not welcome preparing to go into an election year.

02:22His spokesperson saying earlier today that the Chancellor's priority

02:26is to try and secure jobs.

02:29But it really has been a bumpy road for the auto sector in recent months.

02:33We've seen Porsche and Mercedes-Benz in the past week

02:36announce their own cost-savings measures,

02:39particularly because of some weakening demand within China

02:42amidst stiff competition from some Chinese brands like NIO and BYD.

02:47So, look, a bumpy road ahead, really, I think, for the German auto sector.

02:50And we will learn more later this week

02:52when the Volkswagen board sits down with those employers' groups

02:55to discuss what they'll do next.

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