Volkswagen Group has said it is terminating employment contracts in Germany, a move that could lead to job losses at six German factories.
Several media outlets in Germany report that the company has notified the IG Metall union of the termination of a series of employment contracts, including an agreement that guarantees jobs at six German factories until 2029.
VW warned last week that it could no longer rule out factory closures or layoffs in Germany as the company implements cost-cutting measures to survive despite major challenges, including the shift to electric vehicles and growing competition from Chinese OEMs.
Reports in Germany suggest the company is looking to continue cutting costs in the relatively expensive Germany. Representatives of the IG Metall union have said they will fight to keep all sites and protect jobs.
“We must enable Volkswagen AG to reduce costs in Germany to a competitive level so that we can invest in new technologies and new products with our own resources,” Gunnar Kilian, the company’s chief labor officer, said in a statement, according to Reuters.
Justin Cox, analyst at GlobalData, told Just Auto: “This latest news suggests that capacity utilisation at some relatively expensive plants in Germany is at levels that make it difficult to make profits.
“That is undoubtedly a major concern in light of the potential Chinese competitive challenge in electric vehicles, and the energy transition that is impacting the entire sector. In fact, VW faces significant headwinds in terms of cost efficiency, while at the same time we see others – particularly the Chinese – gaining competitive advantage through lower unit costs, higher volumes and supply chain advantages.”
“Volkswagen scraps job guarantees in Germany” was originally created and published by Just Cara brand of GlobalData.
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