A few months ago, Volkswagen was planning to close a few of its plants in Germany due to increasing costs and diminishing profits. But they will keep all their factories open after a new agreement with its IG Metall union. The automaker has also guaranteed all the workers jobs till 2031.
The union and Volkswagen have come to an agreement, with the union pulling its request for wage increase and that they will not ask for it again til 2031, as reported by New York Times and the decision comes after a long battle about the brands future in Germany.
Daniela Cavallo, the head of the works council at Volkswagen said, “No site will be closed, no one will be made redundant and out company wage agreement will be secured for the long term.”
The factory closure was mainly due to dwindling sales of EVs. The CEO of Volkswagen, Thomas Schaefer said that they will need to close factories and force layoffs and that wage cuts might be needed. The Dresden facility which is responsible for building ID.3’s and Osnabruck Plant where Porsche makes its 718 were rumored to come under the bus and be shut off. But even after low EV sales and the discontinuation of the 718 Cayman, Volkswagen will not shut down the plants and rather repurpose them.
Even though they are keeping the factories open, Volkswagen did announce that they will cut down jobs, nearly 35,000 of them in order to reduce cost. Currently, Volkswagen employees around 120,000 people in Germany and they will slowly reduce this number over a period of 5 years with early retirement packages and voluntary measures.
The EV revolution has really taken a toll on the legacy manufacturers. The demand is slowly drying up with many shifting back to ICE vehicles. There is stiff competition from the Chinese as well where sales of foreign brands have plummeted. Volkswagen had to close down their Chinese facility some time back, mainly due to financial reasons. What Volkswagen needs to do is bring their old ways of innovation back, the company flourished when it was not running after other but instead created their own trends.
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