Volkswagen is under such financial strain that, according to Reuters, factory closures might be unavoidable, putting thousands of jobs on the line. The company’s financial troubles have reached a tipping point, forcing management to consider drastic steps like layoffs and factory shutdowns in Germany.
The automaker is facing a mountain of debt and a challenging economic climate, making big cuts necessary.
The Financial Times reports that Volkswagen is thinking about shutting down three factories in Germany and laying off tens of thousands of employees. On top of that, there’s talk of cutting wages by 10%.
Daniela Cavallo, the chief representative for VW employees, told The Financial Times that management has only two days to reconsider these plans; if not, employee strikes could be on the horizon.
“Management is completely serious about this. This isn’t just saber-rattling for the negotiations,” she told Reuters.
Closing factories in Germany would be a major move for Volkswagen, which has been around for 87 years and currently operates ten factories with 300,000 employees in the country.
Several factors are fueling Volkswagen’s financial strain. Competition from Chinese manufacturers, a dip in sales in major markets, and the high costs of transitioning to electric vehicles are all piling up.
Volkswagen recently adjusted its earnings forecast, citing these market challenges.
According to Automotive News Europe, the company is exploring different ways to cut costs, like reducing salaries and scaling back bonuses.
Volkswagen has declined to comment on these reports, saying the news is just speculation about ongoing talks between the company, IG Metall, and employee representatives.
