HANDOVER: Volkswagen AG (VW) chief executive officer (CEO) Oliver Blume will confront workers over his plans to radically shrink the carmaker, a test of his ability to push through sweeping changes at speed.
Blume and Volkswagen brand chief Thomas Schafer are due to present their restructuring plan, which could wipe out as many as 100,000 jobs, at the company’s main Wolfsburg factory.
It’s the first of a series of townhall gatherings across Germany in the coming days.
Tensions have been running high even before the initial meeting. IG Metall chief Christiane Benner has branded the CEO’s push to slash costs and lift margins to 9% as “cloud cuckoo land”.
A local unionist on Monday warned that the group is willing to consider strikes if Blume doesn’t walk back his plans.
But the 58-year-old manager has made the overhaul the defining test of his tenure.
He wants to reduce costs and remake VW for an industry upended by electric mobility, software and fast-moving rivals from China.
The automaker’s special governance means he cannot simply order the cuts, but needs to bring powerful labour leaders and the state of Lower Saxony, which can veto some major decisions, along with him.
“There are many enemies, many veto players and little support,” said Wolfgang Schroeder, a political science professor at Kassel University who has studied German labour relations and VW.
Pressure is also coming from above. Porsche SE, the holding company of the billionaire Porsche-Piech family that controls VW, has urged management to move faster, warning that VW is at a “historic crossroads”.
The clan has its own reason for urgency: waning profits at VW and sports-car maker Porsche AG are minimising the dividends it’s long relied on.
VW’s earnings have been battered by declining sales in China, high expenses in Germany and underused factories. That’s leaving the company with a roughly 30% cost disadvantage to some rivals and at least €10bil of overhead to strip out.
Management is working on plans to cut another 500,000 vehicles from annual European production capacity, thin managerial ranks and slash the number of models and equipment variants.
This week, Blume is taking his argument directly to the factory floor: while he and Schafer appear in Wolfsburg, senior executives including chief financial officer Arno Antlitz will fan out across VW’s German plants to argue that deeper cuts are unavoidable.
Workers have already agreed to tens of thousands of job reductions, only to be told more are needed. Labour leaders said VW employees are being asked to pay for years of strategic mistakes on software, electric vehicles and China.
Management needs to deliver future job perspectives for workers at all German plants, the company’s top labour official Daniela Cavallo said on Monday in Hanover. — Bloomberg
