Works council criticizes goals
VW begins negotiations on austerity program
September 19, 2023, 9:00 p.m
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The German car company Volkswagen has been preparing an extensive savings program since June. The core brand is expected to increase returns by 2026. Now VW wants to negotiate the planned billion-dollar savings with the works council. The works council leader Cavallo criticizes the return targets.
Volkswagen is starting negotiations with the works council about the planned billion-dollar savings for the low-profit main brand VW. “We have always said: By autumn we will be working on a convincing overall package, including target images for each department and location – backed up by concrete measures,” said brand boss Thomas Schäfer on Tuesday to the workforce in Wolfsburg, according to excerpts from speeches published on the VW intranet. “We will present this to the works council within the next few weeks and discuss it together.” The aim is to find a viable solution for the employees and the company behind closed doors.
Volkswagen announced a performance program in June to trim profitability within three years. The volume brand is expected to increase the return to 6.5 percent by 2026 from the 3.6 percent that VW achieved in 2022. Around ten billion euros are to be freed up for this through efficiency improvements and savings. “6.5 percent returns are the basis for Volkswagen to return to the top – with top quality and mobility for everyone,” emphasized Schäfer in front of more than 10,000 employees in Hall 11 of the Wolfsburg headquarters. Thousands of other employees joined the meeting via livestream, where the new Tiguan was also presented.
“Already the perfect storm”
Works council leader Daniela Cavallo made it clear to the workforce that she was critical of the return targets. “The target image of a 6.5 percent return is not one that the workforce takes with them,” said Cavallo, according to the speech excerpts. “That’s not the compass we need here,” she added. Cavallo criticized the fact that there was already speculation among the workforce about possible levers for the austerity program, but that there had been no official announcements from management so far. Individual managers are already working on model calculations for workforce reductions in their areas of responsibility. Ideas about outsourcing also made the rounds. At the same time, the works council leader praised the collaboration with CEO Oliver Blume and brand boss Schäfer.
This is necessary as a basis to overcome the “multiple crisis” of a finite combustion engine business, the slow ramp-up of electromobility, current delivery bottlenecks, the pressure for digitalization and the new tech competition from China. “It’s already the perfect storm that we’re heading towards,” said Cavallo.