Volkswagen is considering closing factories in Germany to further cut costs, an unprecedented move that would deal another blow to Chancellor Scholz's government. The potential measures target Volkswagen's main passenger car brands as well as other group entities, according to a statement released on Monday. Specific measures also include trying to terminate the agreement reached between the company and the union to ensure employment stability until 2029.
A closure would mark the first time Volkswagen has closed a factory in Germany in its 87-year history, and the company is expected to clash with powerful labor unions.
"The economic environment is becoming more difficult and new players are entering Europe," Volkswagen CEO Oliver Blume said in a statement. "As a business location, Germany is falling further behind in terms of competitiveness."
According to a separate statement, Works Committee President Daniela Cavallo said management acted poorly after the company held a meeting to discuss in detail the potential losses for its core brands, which make Golf and Tiguan models. The company said it plans to close at least one of its larger car-making plants and a parts plant in Germany, while scrapping a wage deal.
Volkswagen has about 650,000 employees worldwide, nearly 300,000 of whom are in Germany. Half of the seats on the company's supervisory board are occupied by labor representatives, and the German state of Lower Saxony, which owns 20% of the company, usually sides with the unions.
Lower Saxony expressed support for Volkswagen's cost-cutting measures, adding that alternatives must be explored in talks with labor representatives.
"We hope that, thanks to the successful use of alternatives, there will be no problem of plant closures," said state governor Stephan Weil, a member of Volkswagen's supervisory board. "The state government will pay special attention to this."