German automobile giant Volkswagenannounced on Thursday that it would be cutting a total of 100,000 jobs by the end of the decade in what is set to be the biggest restructuring ever seen in the global car industry.
The company said that management and trade unions had approved a plan involving the reduction of a further 50,000 jobs, in addition to 50,000 redundancies already agreed.
“It is essential to systematically align workforce levels with economic realities,” read a statement from the multi-brand Volkswagen group which, apart from VW itself, also includes Audiand Porsche.
The total of 100,000 cuts amount to about 15% of Volkswagen staff worldwide. The cull eclipses the 50,000 job cuts General Motors made after it declared bankruptcy in 2009.
Unions and management had publicly rowed before signing off on the plans, with the former accusing the latter of not been honest with the workforce after the figure of 100,000 possible job cuts surfaced in the media before being communicated internally.
‘The motor of the entire region’
What’s more, Volkswagen also said the long-term future of four major German plants – in Hannover, Emden, Zwickau and Neckarsulm — could not be guaranteed. Their closure would mark the first full-scale shuttering of Volkswagen factories in its home country.
“If this plant really were shut down, you could put a big black spot on the map,” one long-term employee in Zwickau, Saxony, told the AFP news agency.
“The plant and the jobs outside it, our suppliers, they’re the motor of the entire region.”
Caught between US tariffs, Chinese competition and a sluggish growth in demand for electric vehicles, Europe’s largest carmaker is in trouble.
Company reforms to drive profitability
However, CEO Oliver Blume insisted that the decision to cut 100,000 jobs sent “a strong signal for the future of the Volkswagen Group.”
Volkswagen did not give details as to the timing of the cuts and how they would be distributed across the different regions where it has plants and offices, but the company said its focus will turn to North America and that it is looking to expand exports to the Global South.
The plan also includes a three-digit-billion sum investment over the coming years as VW looks to improve technologically through research and development and become more competitive.
Among the moves is a structural change that should bring about faster decision-making and a cut to the number of businesses and holdings it owns by about one-third.
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Edited by: Dmytro Hubenko
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