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The
plan put forward by CEO Oliver Blume to counter low-cost
competition in China and headwinds from U.S. tariffs overcame
resistance from employee representatives and the regional
government, which holds a stake in the company.
“This is a strong signal for the future of Volkswagen Group,”
Blume said in a statement. The plan would “make our iconic
brands even more attractive, stronger and competitive.”
The plan foresees reducing the number of models by around 50%.
The company said it had excess production capacity of 500,000
vehicles in Europe and that “a competitive future production
allocation ... cannot be secured” for plants in Emden, Zwickau,
Hanover and Neckarsulm, although alternative uses will be
explored. The board statement said there would be an “adjustment
of the employee numbers of around 50,000 positions,” including
management jobs.
Slimming the number of models would mean higher volumes per
model, lowering fixed costs.
The plan also calls for “leaner leadership structures and
shorter lines of decision.”
Thursday’s news release was accompanied by a statement from
chief employee representative Daniela Cavallo that the plan was
“a necessity for our company to move successfully into the next
decade without the associated undertakings coming only on the
side of the employees.”
Cavallo had been strongly critical of the plan when it was
presented over the summer. Worker representatives have half the
seats on the board, while the government of the Lower Saxony
region where Volkswagen is headquartered has two seats.
The governor of Lower Saxony, Olaf Lies, said that the company
was facing “enormous” challenges and that the plan represented
“a shared path toward the necessary transformation.”
Volkswagen, which has around 650,000 employees, reported a 30%
drop in after-tax earnings for the first half of the year as
sales took a hit in China. In addition to the core Volkswagen
brand, its other nameplates include Audi, Skoda, Porsche and
SEAT.
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