Volkswagen at war with unions
The company is considering potential life-saving measureswhich included an attempt to end a three-decade long conflict company’s arrangement with employees in order to protect jobs, the company said on Monday. VW is considering abandoning the production of passenger cars with combustion enginesas margins and profits from their sale are decreasing due to the growing interest electric vehicles and the inheritance consumer spending.
Full size Labor dispute would be a serious challenge for the CEO, who is also the head of the sports car brand Porsche. Union clashes unseated many of VW’s predecessors.
Volkswagen has lost its competitive edge
The potential liquidation of production would mean first factory closures in Germany in the company’s 87-year history. VW shares rose 1.3 percent yesterday after news of a recovery this year’s loss by 13 percent
“The economic environment has become even more difficult, with new players entering Europe,” he said in a statement. VW CEO Oliver Blume. “Germany as a business location, they lag behind in terms of competitiveness.”
Achieving profits at VW hampered by higher logistics, energy and labor costs. The brand’s margin fell to 2.3 percent in the first half of the year, compared with 3.8 percent a year earlier. The company also lost momentum in its largest market, China. Range EV models offered in the Far East is far behind the competition, while cheaper Chinese electric cars are entering Europe.
German electric car sales struggle to recover, with battery-powered car registrations falling after incentives were withdrawn last year / Bloomberg
Political change
The inevitable conflict with the unions at one of the largest companies in Germany threatens post-war consensusin which employees have a significant influence on decisions made in the companywhere they work. Decades of agreements will have to be forgotten as new competitors attack German industryand populist parties are growing stronger.
Electoral defeat of Scholz and his coalition partners
On Sunday, the election results in two eastern German states brought another humiliation to the Social Democrats. Chancellor Olaf Scholz and his two coalition partners. The party An alternative to Germany (AfD) came second in Saxony, where VW owns the electric vehicle production plant in ZwickauIt also won elections in neighboring Thuringia, the first triumph for a far-right party in a German state election since World War II.
“I am deeply concerned that VW Group management no longer rules out plant closures and forced layoffs,” SPD MP Bernd Westphal, the economic policy spokesman for Scholz’s parliamentary group, told Bloomberg News. “The SPD parliamentary group stands firmly on the side of the employees and expects constructive talks” with works councils and unions.
The end of dual power in the supervisory board
VW employs around 650,000 people worldwide, of whom almost 300,000 in Germany. Half of the places in Supervisory Board The company is occupied by trade union representatives. German the state of Lower Saxony, which owns 20 percent of the company’s sharesoften sides with the unions. This arrangement is part of a complex management system in which management must obtain support of the Porsche-Piech billionaire family and union side for implementing important decisions.
The head of the works council, Daniela Cavallo said in a separate statement that VW executives had warned that the brand, which makes the Golf and Tiguan models, was at risk of losing money. The company was considering closing at least one major car factory and one component plant in Germany, as well abolition of wage agreements.
The end of dreams about new models?
VW also “rules out” production of a compact electric SUV model at the main car plant in Wolfsburg from 2026, which is crucial for fulfilling the plant’s production capacity, the works council said. Trinity Modelcurrently planned for production in Zwickau, is at risk of delay.
The federal state will fight for jobs
Lower Saxony stated that it supports VW’s actions aimed at cost reductionadding that it is necessary to consider alternative options in talks with union representatives. “We expect that the problem of closing factories will not arise thanks to the effective use of alternatives,” he said Stephan Weil, Minister-President of Lower Saxony and member of the Supervisory Board of VW. “The state government will pay particular attention to this.”
List of “fallen” CEOs
Previous clashes have ended or shortened the tenures of top executives, including the former CEO Bernd Pischetsriederformer head of the VW brand Wolfgang Bernhard and Herbert DiessBlume’s predecessor as CEO. All three they tried to push for increased efficiencyespecially in VW’s German operations.
Another pebble in Germany’s economic avalanche
VW’s plans are threatening the intensification of economic problems in Germanywhere industrial enterprises limit investments. VW market valuation fell to around EUR 51 billion, although the company continues to make a profit and last year operating income amounted to EUR 22.6 billion.
German electric car sales struggle to recover, with battery-powered car registrations falling after incentives were withdrawn last year / Bloomberg
Central government problems
The unpopular coalition government in Germany, led by Scholz’s Social Democrats, is struggling with internal conflicts, which is only worsening the economic situation of the country. Last year the government suddenly removed incentives to purchase electric vehicles. Falling sales on the largest car market in Europe has become a burden since then.
“Automotive industry faces serious challenges worldwide and is undergoing a profound transformation that requires companies to make strategic decisions,” the Ministry of Economy said in a statement. “It is essential that companies and management act responsibly and in close consultation with social partners.”
Luxury Q8 e-tron “up for grabs”
VW’s plans for further cuts follow July’s announcement of the potential closure of a plant in Brussels that produces Electric Audi. The factory is struggling with high costs and weak demand for the only model it produces: the luxury Q8 e-tron. The carmaker also lowered its forecasts for this year, which is likely to be partly due to the costs associated with closing the plant. The last time VW closed a major car factory was more than 30 years ago. assembly plant in the USAnear Pittsburgh.
Mark Volkswagen has production plants components in Braunschweig, Kassel, Salzgitter, Hanover and Chemnitz, as well as automotive plants in Wolfsburg, Emden, Zwickau, Dresden, Osnabrück and Hanover.
