Volkswagen AG CEO Oliver Blume is encountering significant resistance from influential labor leaders and the state of Lower Saxony concerning his proposed deep cost-cutting and restructuring plan. The plan, considered by the supervisory board, could lead to the elimination of as many as 100,000 jobs – approximately 16% of Volkswagen's global workforce – and the closure of four German factories, including Audi's Neckarsulm plant. This drastic measure aims to counter eroding profits in critical markets like China and address high energy and labor costs in Germany.
Powerful labor groups, including IG Metall, Germany's largest union, and Volkswagen's works council, vehemently oppose these cuts, arguing that employees have already contributed significantly. Christiane Benner, IG Metall chairwoman, and Daniela Cavallo, head of VW's works council, have dismissed the proposals, threatening to fight them with "all our might." They criticize management for past poor decisions regarding the shift to software-focused and electric vehicles, emphasizing that the current crisis is not workers' fault.
Any substantial restructuring faces steep hurdles due to Volkswagen's unique ownership structure. Labor representatives hold half the seats on the supervisory board, with two additional seats held by the federal state of Lower Saxony, which typically aligns with labor. This effectively grants labor a blocking minority. While Lower Saxony officials are reportedly open to considering new uses for factories, such as defense contractors, outright closures or significant job cuts without union approval remain highly contentious, potentially sparking months of negotiations between management, unions, and politicians.
