The German union IG Metall and Volkswagen management have agreed on a plan that avoids plant closures and mass layoffs, it was announced Friday. However, the automotive group maintains its intention to eliminate more than 35,000 jobs in a “socially responsible” way by 2030, as part of an adjustment plan aimed at regaining profitability.
Plant restructuring and production
The agreement involves repurposing the Dresden plant for activities other than car manufacturing and seeking an external investor for the Osnabrück plant. In the meantime, an assembly line in Zwickau will be closed, leaving the Audi Q4 e-tron as the only model produced there. Other models, such as the ID.3 and Cupra Born, will be moved to Wolfsburg, while the ID.4 will be produced in Emden. The compromise also includes cuts in employee bonuses and profit-sharing payments, the works council reported.
Impact on workers and prospects for Golf
Despite the pact, labor tensions persist. In December, almost 100,000 workers went on strike after management rejected a union proposal that included reducing dividends and adjusting bonuses. In addition, the future of the Golf model remains in doubt, as production could be moved from Wolfsburg to Mexico to reduce labor costs. This vehicle, considered the group’s flagship, is facing a drop in sales in North America, where only 10,000 units were sold in 2023.
Volkswagen facing financial challenges
Volkswagen faces a 30.7% drop in net profit to September 2024, reaching 8,917 million euros due to higher operating costs and restructuring provisions. Although the group’s revenues grew by 0.9% year-on-year, operating profit fell by 20.5% to a margin of 5.4%. The company expects to close 2024 with revenues of €320 billion and a margin of 5.6%, down from the €322 billion achieved in 2023. In its automotive division, Volkswagen expects a net cash flow of €2 billion. Meanwhile, its market capitalization is down 16%, with shares trading at €88.8, compared to €109 at the start of the crisis.
