Volkswagen faces union protests over potential 100,000 job cuts globally
What's the story
Volkswagen, Europe's largest carmaker, is facing backlash from its employees over a proposal to cut up to 100,000 jobs and close several factories. The company's management will present the restructuring plans to the supervisory board today. The move comes as VW grapples with US tariffs, shrinking electric vehicle (EV) profit margins, and fierce competition in China.
Job cuts
VW's plans to cut jobs and close plants
VW is already in the process of cutting 50,000 jobs in Germany by 2030, including 35,000 at its namesake brand. However, CEO Oliver Blume now plans to cut an additional 100,000 jobs globally and close three German VW plants as well as an Audi factory. The proposals have been met with fierce resistance from IG Metall union head Christiane Benner and VW works council chief Daniela Cavallo.
Protests planned
IG Metall protests outside VW plants
IG Metall has organized protests by VW workers outside plants across Germany today, when the carmaker's bosses will present the restructuring plans to the supervisory board. If these plans are approved, it would mean a 15% cut in VW's global workforce of some 630,000. This would be bigger than any other job-cutting drive in the auto industry, including General Motors's decision to cut nearly 50,000 jobs in 2009 after declaring bankruptcy.
Market struggles
VW's competitors are also struggling
The entire German auto industry, including VW's competitors BMW and Mercedes-Benz, has been struggling in recent years. A VW spokesperson said the group needs to "improve its competitiveness" and apply "even more rigorous cost and investment discipline." Blume has warned that the company needs to change or it will die. He cited regional market conditions, trade policy changes, regulatory requirements in different regions of the world as well as high-cost positions in Europe as reasons for this shift.
Market challenges
Higher US tariffs and declining sales in China
Higher US tariffs on cars and auto parts introduced last year are expected to cost VW €5 billion ($5.7 billion) annually. The situation is particularly bad for Audi and Porsche, which have no US factories. In China, VW has been facing years of declining sales amid stiff local competition, with vehicle deliveries hitting their lowest level since 2011 last year.