Volkswagen Labor Leaders Vow Fight as CEO Pushes Deeper Cuts

The VW factory in Wolfsburg, Germany. Photo by Krisztian Bocsi /Photographer: Krisztian Bocsi/Bl

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(Bloomberg) — Volkswagen AG’s powerful labor leaders vowed to fight against plans for large-scale job cuts and factory closures in Germany ahead of a closely-watched meeting of key investors and stakeholders.

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“This is a clear signal to the management board: Not with us,” IG Metall union chairwoman Christiane Benner said Thursday in a statement ahead of a VW supervisory board meeting. “The employees have made their contribution.”

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Europe’s largest automaker is under intense pressure to slash costs and improve efficiency, which has revived tensions between management and labor leaders. Profits have eroded in VW’s biggest market, China, and top executives led by Chief Executive Officer Oliver Blume have called for measures to boost competitiveness. These target particularly German operations, where energy and labor costs are high.

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“Management and supervisory board share the concerns about the future of the VW Group,” VW said in a statement. “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.”

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IG Metall, Germany’s largest labor union, is staging protests Thursday 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.

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

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Audi management has pushed to discuss uses for the site with labor representatives, according to people familiar with the matter. Worker officials have been reluctant to consider proposals involving southern German defense companies seeking additional manufacturing capacity, the people said.

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The latest 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 reported last month, citing management plans set to be presented at Thursday’s board meeting. 

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

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Any decisions on further cuts would still 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 the German federal state of Lower Saxony, which usually sides with labor.

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Lower Saxony, which also holds a 20% stake and certain veto rights, 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.

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

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