Volk­swa­gen to shed 30,000 jobs

Daily Local News (West Chester, PA) - - BUSINESS - By David McHugh AP Busi­ness Writer

FRANK­FURT >> Volk­swa­gen an­nounced plans Fri­day to cut 30,000 jobs in a wide-rang­ing re­struc­tur­ing of its name­sake brand as it tries to re­cover from a scan­dal over cars rigged to cheat on diesel emis­sions tests.

The Ger­man com­pany said the job cuts, which ac­count to around 5 per­cent of its global work­force, are part of a long-term plan to im­prove prof­itabil­ity and shift re­sources and in­vest­ment to elec­tric-pow­ered ve­hi­cles and dig­i­tal ser­vices.

At a news con­fer­ence at Volk­swa­gen’s head­quar­ters in Wolfs­burg, com­pany of­fi­cials said 23,000 of the job cuts will be in Ger­many and that the mea­sures will save some 3.7 bil­lion euros ($4 bil­lion) a year from 2020. Volk­swa­gen em­ploys around 120,000 peo­ple at its name­sake brand in Ger­many.

The com­pany also said it would be hir­ing for some 9,000 new po­si­tions re­lated to new tech­nol­ogy, and that some of those jobs could go to cur­rent em­ploy­ees.

CEO Matthias Mueller said it

was “the big­gest re­form pack­age in the his­tory of our core brand.” In ad­di­tion to Volk­swa­gen, the com­pany also makes cars un­der other brands in­clud­ing Porsche, Audi, SEAT, Skoda and Lam­borgh­ini.

The an­nounce­ment caps a dif­fi­cult year for Volk­swa­gen, which has been em­broiled in an emis­sions-rig­ging scan­dal that da­m­aged the com­pany’s rep­u­ta­tion and cost it bil­lions.

In re­sponse, Volk­swa­gen has agreed to pay $15 bil­lion to U.S. au­thor­i­ties and own­ers of some 500,000 ve­hi­cles with soft­ware that turned off emis­sions con­trols.

Around 11 mil­lion cars world­wide have the de­cep­tive soft­ware.

The scan­dal has been a spur for the com­pany to ad­dress long­stand­ing prob­lems such as high fixed costs at its man­u­fac­tur­ing lo­ca­tions in Ger­many and ex­ces­sively top-down man­age­ment that many say cre­ated an en­vi­ron­ment that en­abled the cheat­ing.

Her­bert Diess, head of the core Volk­swa­gen brand, con­ceded that Volk­swa­gen had let its costs rise and “lost ground in terms of pro­duc­tiv­ity.” The changes, he said, would make the com­pany “leaner and more ef­fi­cient.”

The cuts are aimed at ad­dress­ing Volk­swa­gen’s long­stand­ing cost is­sue.

Volk­swa­gen, with 624,000 em­ploy­ees around the world, sells roughly the same num­ber of cars as Toy­ota and Gen­eral Mo­tors — around 10 mil­lion a year. But Toy­ota does it with 349,000 work­ers and GM with 202,000.

One rea­son of­ten cited for VW’s higher cost-base and head­count is the role that em­ployee rep­re­sen­ta­tives play at the com­pany.

As at other large Ger­man com­pa­nies, em­ploy­ees have half the seats on the board, a power they can use to re­sist mov­ing pro­duc­tion out­side Ger­many or to sup­pli­ers. In ad­di­tion, the state of Lower Sax­ony, where the head­quar­ters is lo­cated, owns a stake in the com­pany and tends to sup­port em­ployee in­ter­ests as well.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.