With the aim of reducing production costs to gain competitiveness, The Volkswagen Group, the largest European automotive group and the second largest in the world, needs to cut 10 billion euros in the next two yearswhich involves the closure of two of its German factories. It turns out that if the German economy depends largely on the success of its strongest industry, the automobile industry, German manufacturers also depend on the help and support of the German State which, as the largest contributor to the European Union, has the ability to change laws in order to favor the interests of the house brands. Still, he The strategy applied does not seem to be working. positively and on several levels.
According to Reuters, Volkswagen, as the group’s leading brand, will also be the first to implement cost cuts, with the aim of saving 10 billion euros by 2026, with the goal of Control investments in electric vehicles. And on the table, as announced to the strong union of the sector, IG Metal, is the fact that the group considers that Two of its factories are expendable and the goal is to close them, which is happening for the first time in 87 years. and will involve a considerable reduction in the number of jobs. This measure will not be easy to implement, since In 1994, Volkswagen promised to protect jobs, a measure that should be in force until 2029.which is now in question.
According to the CEO of the German group, Oliver Blume, “the European automotive industry is going through a very difficult and demanding period” and, given the arrival of new competitors, “It is necessary to act decisively”. Volkswagen brand CEO Thomas Schaefer supports the new strategy. According to him, “past efforts to reduce costs have yielded results, but the new challenges ahead are proving to be even stronger.” This is a Obvious reference to cars made in China. which enjoy state benefits deemed illegal by the World Trade Organisation, with German manufacturers such as VW being the only European manufacturers not advocating tougher sanctions: the United States and Canada are promising an additional 100% tax, while Europe is penalising Chinese cars by 17% to 38%, all to prevent the Chinese state from retaliating against luxury vehicles that Germans want to sell in China.
The closure of two factories does not cover the needs
In addition to opposition to layoffs and cuts, Volkswagen faces other difficulties, especially those indicating that will not be able to reduce costs by 10 billion in the next two yearsas expected. According to analysts, the announcement of an operating profit of 966 million euros in the first half of 2024, far from the 1.64 billion in the same period of the previous year, is of little help. The German press believes that it is difficult to defend the German group’s approximately 680,000 employees worldwide and currently points to the factories in Osnabrück and Dresden as the main candidates for closure.
Osnabruck produces cars in small quantities, such as the VW T-Roc Cabriolet and the Porsche Cayman and Boxster, and all three models are scheduled to cease production by 2025. The second factory to be sacrificed is the one in Dresden, by far the most beautiful car factory in the world, covered entirely in glass and hence known as the Transparent Factory. However, this is not a real factory (it has no stamping, welding or painting stations, let alone engine and gearbox production), but simply an assembly line, which receives already built and painted ID.3 chassis shipped from Zwickau to be finished there, with the possibility for customers, for an additional fee, to continue production of their electric vehicle, exactly as was the case before with the e-Golf and, a few years earlier, with the VW Phaeton. If the end of these two manufacturing facilities is confirmed, it will not be easy for the German group to achieve major savings.especially with Dresden, a beautiful factory in the middle of a city park, but which only has 340 employees.
Source: Observadora
