Vote Fails

Chaos at VW After Drastic Cost-Cutting Measures: Now the Executives Speak Out

Volkswagen CEO Oliver Blume spoke out following the failed vote on the cost-cutting plan.(Bild: AFP/RONNY HARTMANN)

Volkswagen CEO Oliver Blume failed to secure approval on Thursday during a vote by the supervisory board on the future of the company. According to a report, the main sticking points are two issues—namely, restructuring and the planned job cuts. Now, company executives have taken a stand and responded to criticism from the union.

On Friday, Oliver Blume reaffirmed the goal of restructuring the crisis-stricken German automaker. He referred to it as the “most comprehensive realignment in the group’s history.” He said the transformation is moving forward, and Volkswagen will be “positioned to be even more robust and competitive.” “We are mitigating risks, tapping into new opportunities based on our own strengths, and sending a clear signal of a new beginning for Germany as a business location,” Blume added.

VW Chief Financial Officer Arno Antlitz was a bit more specific. “We want to continue investing in exciting electric vehicles and the latest software solutions for our customers, while at the same time keeping our internal combustion engine vehicles technologically competitive and strengthening our presence in major global markets.” To achieve this, the Group must consistently cut costs, leverage Group synergies, and reduce complexity. The Future Plan is a “powerful lever” for this. In other words: Jobs are at risk, and the product portfolio will be scaled back to boost earnings.

Volkswagen cars produced in China(Bild: AFP/CN-STR)

Workers at the Volkswagen plant in Dresden(Bild: AP/Matthias Schrader)

Volkswagen CEO Oliver Blume has spoken out following the failed vote on the cost-cutting plan.(Bild: AFP/RONNY HARTMANN)

Cost-Cutting Plan in Phases
However, the plan failed to secure a majority on the supervisory board on Thursday. Twelve votes were against the “Future Plan,” and seven were in favor. No resolution was passed at all. As a result, Blume now intends to push through his cost-cutting plan in stages, as the German newspaper “Handelsblatt” reported on Friday. Internal sources indicated that four of the group’s plants in Germany could be closed: Hanover, Emden, Zwickau, and Neckarsulm. However, no decision has reportedly been made on this matter yet.

Instead, the supervisory board announced its intention to downsize management. In total, about 5,000 jobs could be cut, it was reported. In addition, there will be fewer vehicle models in the future, and production at the plants will be reduced from the current ten million to around nine million vehicles. The model lineup is to be cut by half, and the number of trim levels by as much as three-quarters.

“Manager Magazin” had previously reported that a total of 100,000 jobs are now on the line. The production site in Wolfsburg remains the world’s largest automobile factory to this day, employing approximately 60,000 people there alone. The crisis facing German automakers is also having a negative impact on suppliers in Austria. In this country, VW is headquartered in Salzburg.

Will the talks continue over the summer?
As reported, works council chair Daniela Camillo spoke on Thursday of “disrespect toward the workforce.” She said Blume should “unequivocally address the rumors about the alleged plans of the executive board.” From the works council’s perspective, he still failed to do so on Friday. The supervisory board “spoke up with the usual platitudes,” and Blume resorted to hackneyed phrases.

The style of communication is one of the main points of criticism from the employee side. “Far too much of the future plan still contains major gaps in content, inconsistencies, and contradictions,” according to a letter from the Group Works Council to the workforce on Friday.

Within the company, it is now expected that discussions will continue throughout the summer. However, the next supervisory board meeting is not scheduled until September. Resistance to the cost-cutting plans is also coming from the state. Lower Saxony’s Minister President Olaf Lies (SPD) had announced before the vote that the state would not approve any plan “that relies on plant closures as a supposed solution.”