On Tuesday thousands of VW workers filed into the main factory hall in Wolfsburg for Chief Executive Oliver Blume to put forward a restructuring plan that could cut as many as 100,000 jobs. From the moment they entered the factory hall you could feel the tension in the air. A number of the workers booed as Bume made his way to the platform, others were holding up signs saying: ‘Our jobs are not your balance sheet adjustments’ and ‘Respect is not up for negotiation’. Blume said that the German automaker’s national fixed costs were approximately 30 percent above those of its competitors.
He presented the costcutting as a step to align VW with the rest of the industry, though 100,000 was a benchmark rather than a target. Approximately 50 percent of the additional savings, he said, would probably be achieved in Germany. He also said that the plant closures were still considered an ultima ratio, and a very costly one at that, in the end. No decisions had yet been made.
The meeting was the first of several town-hall meetings planned through the coming days across Germany. Blume showed his face at the first with VW brand chief Thomas Schfer to point to the size of the challenge facing Europe’s largest carmaker. Chinese competition, remnants of tariffs, weaker demand in the key markets, and the expensive electric shift, have all squeezed margins. Operating profit has already declined by a lot and executives say fundamental changes are needed to make the company sustainable. Labor leaders came equipped for battle. Christiane Benner, the head of the EU-affiliated union IG Metall, called the push for higher margins ‘nave’. Daniela Cavallo, the company’s top labor rep.
told coworkers the night before that German plants ‘are still essential’ and that workers ‘should have some outlooks, some perspectives of the future, not another dose of uncertainty’. They have already endured tens of thousands of earlier cuts. Many feel they are being called upon to bear the burden of previous planning errors on software, electric vehicles, and the Chinese market. Elsewhere in the congested hall, hundreds of others watched the debate on a live stream.
The huge crowd was a sign of how profoundly the proposals were shaking the blue-collar workforce and their communitiesat Volkswagen. Shutting down facilities in Hanover Zwickau Emden, or Audi’s Neckarsulm plant would threaten the livelihoods of tens of thousands of workers and their neighbors. Blume called on all to pull together.
But the anger glaring in the eyes indicated the level of the broken trust. Employees and Works Council representatives, point out that in the past, the firm had set sweeping cost reduction targets that in the end demanded even more sacrifice. They are demanding a realistic plan that safeguards jobs and production in Germany not the wishful thinking so far presented to investors. The battle in Wolfsburg is a microcosm of a larger fight going on across Europe in the auto industry.
Californiawages, blunt union muscle, and complicated multi-national corporate structures topped withLarge German States ownership have been Volkswagen’s hallmark for decades. Now those same things stand in the way of the quick change that management thinks is necessary. (Lower Saxony- which owns a large block of votes- has already showed it may oppose initiatives to erode worker power).