Berlin:
Volkswagen, the crisis-hit auto giant, announced its plan to reduce 35,000 jobs in Germany by 2030 as part of a cost-cutting strategy after reaching a deal with unions. This agreement, which will save the company around four billion euros ($4.2 billion) annually, was reached after extensive negotiations with labor representatives.
The IG Metall union praised the agreement for preventing forced layoffs and plant closures, bringing relief just before Christmas and putting an end to the ongoing strikes.
Initially, Volkswagen had considered closing production sites in Germany, but the agreement averted such drastic measures. The company’s management emphasized the urgency of addressing the serious situation at the Volkswagen brand, which employs approximately 120,000 people in Germany.
Volkswagen has been facing challenges in transitioning to electric vehicles and dealing with increased competition in China from local manufacturers. The group, which includes brands like Audi, Porsche, and Skoda, also cited declining demand and high labor costs in Europe as key issues.
As part of the agreement, there will be no plant closures, but production will cease at Volkswagen’s Dresden factory by the end of 2025. The Osnabrueck plant will continue operations until mid-2027 before transitioning to other uses. Additionally, production of the Golf model will be moved from Wolfsburg, Germany, to a facility in Mexico.
The cost-saving measures include a pay freeze for employees in 2025 and 2026, along with the gradual reduction of the workforce. Volkswagen aims to save 1.5 billion euros through lower labor costs and restructuring.
The challenges faced by Volkswagen reflect broader economic struggles in Germany, with high energy prices and the possibility of a second consecutive year of economic contraction. The government has been involved in finding solutions to prevent mass layoffs at the iconic company.
The story has not been edited by NDTV staff and is published from a syndicated feed.
