The German automobile concern Volkswagen AG has been experiencing a lot of difficulties lately. The loss of leadership in the key Chinese market, the revision of electric vehicle plans and the shutdown of factories in Europe, and in North America, Volkswagen could not compete with local manufacturers, primarily Tesla. But that’s not all. A few days ago, Volkswagen executives met with trade union representatives at the company’s headquarters in Wolfsburg, Germany. The discussion turned out to be difficult, because the upcoming staff reductions were on the agenda. According to the Reuters news agency, the company’s top managers made very loud statements bordering on panic.
“Taking into account the existing structures, processes and high costs, the Volkswagen brand has ceased to be competitive,” said Thomas Schaefer, head of the Volkswagen brand (pictured below). Now it has been decided to reduce costs by 10 billion euros at once, and one of the mechanisms to achieve this goal should be mass layoffs. As a result, the company hopes to stand firmly on its feet and be ready for all the challenges of the rapidly changing automotive market with its high competition and greatly changed customer tastes.
“We need to become honest and brave enough to throw overboard everything that duplicates each other within the company or is just a ballast on the way to good results,” suggested another board member, Gunnar Kilian, responsible for working with personnel. However, Mr. Kilian hopes that employees will be “thrown overboard” on their own, ideally partially or prematurely retiring. In addition, he noted that the reduction of the salary fund is not the main measure of saving those 10 billion euros and that other mechanisms will be made public before the end of the year.
The current deplorable situation at Volkswagen is not a surprise for the top management. Back in the middle of summer, Thomas Schaefer warned that “the roof is on fire” (“the roof is on fire”), and now the first real actions have followed.