VW Works Council: Company to Close Three German Plants

The Volkswagen works council has outlined cost-cutting plans that threaten to reshape the company’s operations in Germany.

Works council chair Daniela Cavallo told workers Monday the company’s board plans to shutter at least three of VW’s 10 German production facilities while reducing capacity at the others. “None are safe,” she says.

Cavallo doesn’t name the plants targeted for potential closure, though VW’s Osnabrück plant in the German state of Lower Saxony and Dresden plant in Saxony are both considered outdated and significantly underutilized.

Together with the plant closures, the plans put forward by the VW board include significant workforce reductions, salary cuts and the outsourcing of various departments abroad, she says.

Cavallo says the cost-cutting measures will affect all job categories, from skilled labor to those requiring higher education. She warns employees that “no one can feel secure in this situation.”

With approximately 120,000 employees in Germany – about half of whom work at the main plant in Wolfsburg – Cavallo says the measures proposed by the VW board could lead to the loss of tens of thousands of jobs.

The proposed restructuring includes a 10% salary reduction for remaining employees, a pay freeze for the next two years and the elimination of the monthly tariff allowance of $181 (€167), resulting in an estimated total pay reduction of about 18%.

Cavallo delivers a warning to VW management: “Do not engage in conflict with us, the VW workforce. You are very close to escalation!”

VW reacted to Cavallo’s threat with its board member responsible for human resources saying: "The fact is: The situation is serious, and the responsibility of the negotiating partners is immense. Without comprehensive measures to regain competitiveness, we will not be able to afford essential future investments."

In September, the German automaker said plant closures were on the table, though Monday’s statement provided no specific details.

The German government is urging VW to preserve jobs. A spokesperson for Chancellor Olaf Scholz reiterates that any management errors from the past should not come at the expense of employees.