Volkswagen considers closing a German factory for the first time, triggering widespread attention

Recently, Volkswagen Group issued a statement saying that it is considering closing one of its automobile manufacturing plants and one parts factory in Germany for the first time. As soon as this plan was announced, it immediately triggered widespread attention and controversy.

Volkswagen Group CEO Oliver Blume said that the European automotive industry is facing a severe situation. The economic environment is deteriorating, and new compe***s are constantly entering the European market. Especially in Germany as a manufacturing base, competitiveness is further falling behind. The company must take decisive actions to cut costs. It is reported that Volkswagen's management hopes to save 10 billion euros in operating costs by 2026. For this purpose, it is also considering terminating the employment protection agreement signed with the union in 1994. This means giving up the commitment not to lay off workers in Germany before 2029.

However, this decision has been strongly criticized and resisted by the union. The German Metalworkers' Union accused Volkswagen's leadership's plan of “shaking the foundation of Volkswagen” and posing a serious threat to employment in Germany. Daniela Cavallo, chairwoman of Volkswagen Group's works council, also said that the union will “strongly resist” this proposal from the board. She believes that the company's management has made many wrong decisions in recent years. Instead of choosing to close factories, it should be committed to reducing complexity and taking advantage of the planned synergies of the group.

In addition, the government of Lower Saxony in Germany is also on the side of union organizations. The leader of the state government said that Volkswagen's closure of factories is something that “shouldn't even be thought of”. After all, Wolfsburg, where Volkswagen's headquarters is located, belongs to Lower Saxony. The state government owns 20% of Volkswagen's shares.

Despite facing opposition from many sides, the market has responded positively to this news. Volkswagen's share price rose after the announcement of the plan. In the past five years, Volkswagen's market value has shrunk by nearly one-third. It is the worst-performing among major European automakers. Volkswagen's market share in its largest single market, China, has also declined. In the first half of this year, Volkswagen's sales in the Chinese market were 1.345 million units, a year-on-year decline of 7.4%. At present, Volkswagen has about 650,000 employees worldwide, nearly 300,000 of whom are in Germany. If this factory closure plan is implemented, it may trigger a series of chain reactions. Its subsequent development trend is highly anticipated.