Layoffs loom as Volkswagen fights for survival

As discussed earlier todayGermany’s economy is sinking slowly but surely, regardless of whether Mario Draghi’s proposal to flood Europe with new debt is ultimately accepted, and nowhere is the pain more palpable than at Germany’s iconic automaker Volkswagen, which we reported on last week that he is considering his first. closing the plant amid a dire economic backdrop and which today made the shock decision – for Germany – to end job protections for German auto workers as part of its cost-cutting efforts, setting up a calamitous showdown with unions in the what the most important industry fight in the country for its future.

This morning, the world’s largest automaker by sales canceled several agreements related to a three-decade-old pact that was supposed to save jobs through 2029, VW said. The guarantees will effectively run out by the middle of next year. According to Bloomberg, “the end of job security commitments at a company synonymous with engineering prowess signals how far behind Europe’s largest economy has fallen in terms of competitiveness.”

The moves are intended to “reduce costs in Germany to a competitive level,” VW HR chief Gunnar Kilian said in a statement.

The news came shortly after BMW cut its profit expectations for the year after faulty brakes at German supplier Continental AG prompted a recall of 1.5 million vehicles. Last week, VW announced plans to close factories in Germany for the first time after previous cost-cutting measures faltered.

VW’s primary target is its underperforming eponymous car brand, whose profit margins are tightening amid a strong transition to electric vehicles and a slowdown in consumer spending. European carmakers are also struggling to compete with Tesla and new Chinese entrants led by BYDl, which have been selling cars at dumped prices, angering Brussels.

Cuts at VW are harder to achieve than at other companies, especially as half the seats on the company’s supervisory board are held by labor representatives and the German state of Lower Saxony – which holds a 20% stake – often joins the bodies unions. . car manufacturer, which employs nearly 300,000 Germans, Last week it defended its plans to close the plant, saying weak car sales had left it with about two factories too many.

VW’s cost-cutting plans could result in unintended additional costs for the company of nearly 1 billion euros ($1.1 billion), according to Thorsten Gröger, chief negotiator for the main union IG Metall: Ending guarantees prompts higher wages under previous collective agreements. , he said in a separate statement.

While VW said it was ready to start talks with labor representatives earlier than planned in the next round of negotiations, unions quickly vowed to fight the end of employment protections.

“We will fiercely resist this historic attack on our jobs.” said Daniela Cavallo, VW’s top employee representative and member of the supervisory board. “With us, there will be no layoffs.”

Sorry, but there will be and until layoffs are available, it will be a historical bloodbath.

By Zerohedge.com

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