The president of the VW Group sees no alternative to sharp cuts costs at Volkswagen. “The target of cost and production capacity adjustments has been set, although the path to achieving this target is flexible,” he told Bild am Sonntag.
VW: costs in Germany too high
“Weak market demand in Europe and significantly lower profits from China reveal decades of structural problems at Volkswagen,” he stressed. VW is simply too expensive in the country. “Our costs in Germany must be reduced significantly,” noted Oliver Blume.
“Our labor costs here, for example, are often more than twice the average for our European locations” – explained the VW CEO. “There is also a need to take action on our development and sales costs and in other areas compared to the competition.”
A struggling producer cars unveiled his plans for massive pay cuts this week. The aim is to reduce wages by ten percent, in addition to abolishing special payments and reorganizing the bonus system and hiring apprentices.
One of the desired cost cuts is the abolition of jubilee bonuses for long-serving employees work. According to the works council, there are over 10,000 employees who will receive anniversary bonuses in the coming years.
No information about plant closures
Gunnar Kilian, VW's board member for human resources, called the initiative “a historic change of course for Volkswagen.” To achieve this, workers must be prepared to 'accept cuts'as he said in “Bild am Sonntag”. Only in this way can VW “invest in strong cars on which our success and therefore our jobs depend.”
Volkswagen recently canceled its job security program after more than 30 years; compulsory layoffs will be possible from the middle of next year. According to the works council, at least three plants in Germany may be closed. VW, which employs about 120,000 people in Germany, has not yet provided any details.
Management believes the automaker's competitiveness is at risk. According to Oliver Blume, there is also a need to take action on costs, although at the same time – as he said – VW is actually in a good situation. The group's sales are currently slightly higher than last year. However, operating profit is under enormous pressure after nine months and has fallen by more than 20 percent.
Districts are afraid of cuts at VW
According to the German Association of Districts and Municipalities, the crisis at VW may lead to problems in rural areas. “The current events at VW are not only a real shock for Germany as a whole as a business place, but also in particular for companies supplying the automotive industry, most of which operate in rural areas,” union leader Achim Brötel (CDU) told the group's newspapers media Funke.
In a survey conducted by Civey for the news portal web.de 61 percent of respondents rejected state intervention to prevent plant closures. 25 percent were in favor.
The FDP called on the government of the state of Lower Saxony to withdraw from VW's supervisory board. – The state must limit its political influence on the Group, said the chairman of the FDP of Lower Saxony, Konstantin Kuhle, in an interview for “Die Welt”. The state of Lower Saxony owns 20 percent of VW and has a veto on important decisions. Ministers' Chairman Stephan Weil (SPD) and his deputy Julia Willie (Greens) sit on the supervisory body on behalf of the state. Politicians The SPD of Lower Saxony rejected the FDP's proposal. (DPA, AFP/like)
The article comes from the website Deutsche Welle