Volkswagen plans to close “at least” three German plants and lay off thousands of workers

London
CNN
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Volkswagen plans to close “at least” three factories in Germany, lay off tens of thousands of employees and downsize its remaining plants in the country, the company's workers' group said on Monday.

The domestic plant closures would be the first in Volkswagen's 87-year history and highlight the challenges facing Germany's largest manufacturer. The plans are already facing resistance from unions in the country where Volkswagen employs 295,000 people, setting the stage for possible strikes in the coming weeks.

Volkswagen has been negotiating with unions for weeks over its plans to cut costs and restructure its business operations.

“If VW confirms its dystopian path on Wednesday, the board must expect corresponding consequences from us,” said Thorsten Groeger, negotiator for one of Germany’s most powerful unions. IG Metall announced this in a statement on Monday.

While a potential strike would not be possible until December 1, according to an agreement between the union and Volkswagen, IG Metall told CNN that “tens of thousands” of workers were “ready to express their dissatisfaction with management.”

In its statement on Monday, Volkswagen's works council, which represents workers and holds half the seats on the company's board, said the planned cuts – which include a 10% cut in all workers' wages – were deeper than expected and “of historic proportions”.

“All German VW plants are affected by this. None of them are safe,” added works council chairwoman Daniela Cavallo. She said Volkswagen plans to move some production abroad or outsource it to other companies and warned workers not to dismiss the proposals as simplistic a negotiation tactic.

“This is the plan of Germany’s largest industrial group to initiate the sell-off in its home country,” said Cavallo.

Volkswagen, one of the world's biggest carmakers, has warned that a radical overhaul is needed as the group faces increasing competition in China and declining sales elsewhere. According to executives, the automaker is selling 500,000 fewer cars annually in Europe than before the pandemic, the equivalent of about two car plants.

Volkswagen reiterated these views in a statement on Monday. “The fact is: the situation is serious,” said Human Resources Director Gunnar Kilian. “Without comprehensive measures to restore competitiveness, we will not be able to afford significant investments in the future.”

Thomas Schaefer, CEO of Volkswagen Passenger Cars, added that German factories were not productive enough and that factory costs were up to 50% over the company's budget, making individual factories twice as expensive as those of competitors.

“At Volkswagen we also carry out many tasks internally that the competition has already outsourced more cost-effectively,” he said.

Labor costs are also “significantly too high,” said Volkswagen and announced that it would present “concrete proposals” for reducing them when talks with the unions resumed on Wednesday.

The company did not respond to a CNN request seeking clarification about the factory closures and job cuts. The company had previously said it would seek to terminate an employment protection agreement with unions dating back to 1994 to “future-proof” the company.