Volkswagen CEO Oliver Blume faced strong opposition from employees during a recent meeting at the company’s Wolfsburg headquarters, where he outlined plans for significant cost-cutting measures, including pay reductions and factory closures.
Addressing 20,000 workers, Blume emphasized the need for €10 billion in savings to maintain competitiveness, particularly against rising challenges from China and escalating production costs.
Despite his appeals, the crowd reportedly responded with boos, reflecting growing tensions between management and employees of Germany’s largest private employer.
Blume defended the proposed measures, stating that Volkswagen must adapt to a “rapidly changing environment” to secure its future. These plans include a 20% reduction in wages, the closure of underperforming factories, and increased focus on the Chinese market. He highlighted the immense price pressure and high labor costs in Germany, arguing that these challenges threaten the company’s global competitiveness.
“Our plans are on the table,” Blume told the workers.
He added that securing Volkswagen’s future would require tough decisions. However, his remarks about Wolfsburg being “close to his heart” were reportedly met with interruptions from frustrated employees.
Volkswagen’s works council and the union IG Metall have pushed back strongly against the proposed cuts. Earlier this week, 100,000 workers participated in strikes, demanding fairer negotiations. Daniela Cavallo, head of Volkswagen’s works council, acknowledged the need for compromise but insisted it must apply equally to all stakeholders, including executives and shareholders.
Talks between labor representatives and management are ongoing, with both sides seeking a resolution before the holiday season. Cavallo has called for shareholders to accept reduced dividends as part of the cost-saving efforts.
Volkswagen faces broader industry pressures, including declining demand in its home market and underutilized factory capacity in Germany. Analysts estimate that the company’s German plants operate at less than 60% capacity, leaving up to 800,000 units of unused production annually.
Chief Financial Officer Arno Antlitz emphasized the urgency of improving factory efficiency, warning that underperforming plants risk permanent closure.
“Each underutilized factory gradually bleeds out, becoming inefficient and continuously losing competitiveness,” Antlitz said at a recent conference in London.
He also hinted at potential adjustments to Volkswagen’s dividend policy to align with reduced earnings, a move unions have been advocating.
Volkswagen’s restructuring plans have placed the company at a crossroads, with its leadership striving to balance financial sustainability against employee welfare. While management argues that drastic actions are necessary to secure the carmaker’s future, union leaders and workers remain skeptical, pushing for more equitable solutions.
