VW to cut 30,000 jobs, save €3.7b under new labour pact
VOLKSWAGEN AG (VW) reached a landmark agreement with workers to cut as many as 30,000 jobs globally and save €3.7 billion (RM17.33 billion) in expenses as the company tries to claw back from the emissions-cheating scandal and invest in electric vehicles.
Reducing headcount by nearly five per cent will come through attrition as the carmaker agreed to refrain from forced layoffs until 2025, said the Germany-based company yesterday.
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,” said VW brand chief Herbert Diess at a press conference, here.
“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 VW efforts to accelerate restructuring at its biggest unit and emerge from the worst crisis in its history.
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
COST-CUTTING: Carmaker also agrees to refrain from forced layoffs until 2025
(From left) Volkswagen board member of human resources board member of management of the Volkswagen Passenger Cars brand Herbert Diess, chief executive officer chairman of VW Works council Bernd Osterloh and Lower Saxony State Premier and Supervisory Board member Stephan Weil at the company’s press conference in Wolfsburg, Germany, yesterday. AFP pic
and burdening the 12-brand group with at least €18.2 billion in costs for fines and repairs.
The labour talks, which started in June, went down to the wire, with the supervisory board meeting yesterday to approve the company’s budget for the coming years as it pushes to sell as many as three million electric vehicles a year by 2025 and expand in services like ridesharing.
VW is under pressure to reduce
annual capital expenditures, which currently stand at €12 billion, making the company one of the biggest corporate spenders in the world.
In a concession to workers, the manufacturer agreed to build two electric cars at German sites, one in Wolfsburg and one in Zwickau. The company, which employs 624,000 people globally, will add as many as 9,000 positions for future-oriented projects such as electric vehicles and digital features.
The job cuts will come through early retirement and not replacing workers that leave. The savings comprise €3 billion at its German factories and another €700 million abroad.
In the first nine months of the year, VW’s operating profit margin narrowed to 1.6 per cent from 2.8 per cent a year earlier.
The goal of the labour agreement is to reach a four per cent profit margin by 2020. Bloomberg