VW labor leaders pledge to fight deeper cuts pushed by CEO

The VW factory in Wolfsburg, Germany. (Krisztian Bocsi/Bloomberg)

Volkswagen AG’s influential labor leaders vowed to fight plans for large-scale job cuts and factory closures in Germany as key investors and stakeholders gathered for a closely watched meeting of the supervisory board.

“Us workers didn’t cause this crisis,” Daniela Cavallo, head of VW’s powerful works council, said at a protest at the German company’s headquarter in Wolfsburg attended by several hundred employees. “Management must do its homework, politicians as well, while we’ve already stood ready to do our part.”

Europe’s largest automaker is under intense pressure to slash costs and improve efficiency, which has revived tensions between management and the labor leaders who have broad powers to push back against decisions they disagree with.

Profits have eroded in VW’s biggest market, China, and top executives led by CEO Oliver Blume have called for measures to boost competitiveness. These particularly target German operations, where energy and labor costs are high.

VW said in a statement that management and the supervisory board “share the concerns” about the future of the group. “This is why management has developed an extensive future plan with the goal of making VW and all its brands and units faster, more robust and more competitive,” the company said.

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IG Metall, Germany’s largest labor union, is staging protests July 9 at more than a dozen sites across the country, including in Stuttgart and Ingolstadt, where the group’s Porsche and Audi brands are based. Profits at the group’s one-time cash cows have also been squeezed by weak Chinese demand and the fallout from trade tariffs.

Pressure on labor representatives intensified in the hours before the meeting. Der Spiegel magazine reported that an internal VW document envisaged closing four factories between 2031 and 2034, including Audi’s Neckarsulm plant.

Audi management has pushed to discuss uses for the site with labor officials, according to people familiar with the matter. Worker officials have been reluctant to consider proposals involving southern German defense companies seeking additional manufacturing capacity, said the people, who asked not to be identified discussing confidential plans.

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Blume 

Officials from the federal state of Lower Saxony, which holds a 20% stake in VW that gives it some veto rights, are prepared to agree to new uses of factories, such as by defense contractors, Wirtschaftswoche reported July 9, citing unnamed board representatives. They could also envisage allowing production to end at certain sites by no longer assigning new models, according to the magazine.

The latest media reports build on earlier proposals that had already alarmed labor leaders. VW could double planned job cuts to 100,000 and close four plants in Germany, Manager Magazin said last month, citing plans set to be presented at the July 9 meeting.

Labor leaders criticized management for poor decisions to navigate the industry’s shift toward software-focused and electric vehicles.

“It’s irresponsible how people’s futures are being played with,” IG Metall Chairwoman Christiane Benner said during the Wolfsburg protest.

Any decisions on further cuts would face steep internal hurdles. Steps such as factory closures need approval from the supervisory board, where labor representatives hold half the seats. Their power is compounded by a further two seats held by Lower Saxony, which usually sides with labor.

The region is home to key VW sites, including its sprawling Wolfsburg headquarters. At that site alone, Germany’s most important industrial company employs around 70,000 people.

Other board seats are held by the billionaire Porsche and Piëch family and the Qatar Investment Authority.

“We know we are in a crisis,” Cavallo said at the demo. “And it is not just Volkswagen, of course, but the entire automotive industry.”