VW to slash 30,000 jobs

Agreement will avoid forced layoffs until 2025

FRANKFURT, GERMANY Volkswagen AG reached a landmark agreement with workers to cut as many as 30,000 jobs globally and save 3.7 billion euros (US$3.9 billion) in expenses as the company tries to claw back from the emissions-cheating scandal and invest in electric vehicles.

Reducing head count by nearly five per cent will come through attrition as the automaker agreed to refrain from forced layoffs until 2025, the Wolfsburg, Germanybased company said on Friday. After months of intense talks, labour and management agreed on a package to balance cost-cutting with investment as the auto industry shifts away from traditional combustion engines and adapts to carsharing services and self-driving technologies.

“This is a big step forward, maybe the biggest in the company’s history,” VW brand chief Herbert Diess said at a press conference in Wolfsburg. “All manufacturers must rebuild themselves because of the imminent changes for the industry. We need to brace for the storm.”

The labour agreement is critical to Volkswagen’s efforts to accelerate restructuring at its biggest unit and emerge from the worst crisis in its history. It also allows the carmaker to create more jobs in newer technologies by retraining workers at traditional factories and hiring software engineers and battery specialists. The moves highlight the changes sweeping the auto industry as old-school metal stamping and mechanical expertise make way for electronics and digital technology.

The VW brand is at the centre of Volkswagen’s changes. The unit accounts for almost half of the group’s sales and was struggling even before the emissions crisis erupted last year, tarnishing the marque’s reputation and burdening the 12-brand group with at least 18.2 billion euros in costs for fines and repairs.

The company, which employs 624,000 people globally, will add as many as 9,000 positions for projects such as electric vehicles and digital features.