Experts see risk of a broad economic crisis at VW – Group plans mass layoffs

According to media reports, the possible restructuring or closure of up to four plants by 2034 is also on the table. According to the reports, the affected sites would be Hanover, Emden, Zwickau, and Neckarsulm. Blume acknowledged that "wir heute für die Werke Emden, Hannover, Zwickau und Neckarsulm in den 30er-Jahren noch keine wettbewerbsgerechte Belegung bestätigen können". At the same time, he emphasized: "Intelligente Lösungen sind immer besser, als ein Werk zu schließen."

Background of the crisis

As the Süddeutsche Zeitung reported, Blume only failed with his austerity package in the supervisory board last Thursday. The background includes high wage costs in Germany and increasing competitive pressure, particularly from Chinese manufacturers and the sluggish ramp-up of electric mobility. At the Osnabrück site, VW says it is holding talks with companies from the defense industry about possible new production orders.

Automotive industry expert Stefan Bratzel, director of the Center of Automotive Management (CAM), is warning of the economic consequences of a prolonged crisis at the group. "Wenn Volkswagen strauchelt, hat das Dominoeffekte für breite Teile der Wirtschaft", Bratzel said. He also assesses the risk of a "Detroitization" – alluding to the decline of the US auto city of Detroit – as "nicht unrealistisch". The Bild newspaper had previously reported on this risk.

Risk of a "Detroitization"

Macroeconomic calculations cited by Bild assume more than 200,000 additional jobs could be lost beyond the company itself across the broader economy. This figure includes employees at suppliers, service providers, and in the region. The total number of jobs at risk worldwide could be as high as 120,000, according to media reports.

Not all observers share the gloomiest forecast. Industry expert Ferdinand Dudenhöffer from the University of Duisburg-Essen told the dpa news agency he was convinced: "Nach meiner Einschätzung wird es keine Werkschließung - allerhöchsten Neckarsulm - geben." He also suggested involving the Lower Saxony SPD Minister-President Olaf Lies as a moderator for the talks between VW and the IG Metall union: "Dazu braucht es einen Moderator."

Hope for a four-day week like in the 1990s

Frank Schwope from the Fachhochschule des Mittelstands (FHM) in Berlin also considers layoffs likely, but does not expect the upper end of the scale. "Ich denke, dass man sich irgendwo auf 30.000 bis 40.000 einigen wird", he said. Schwope also pointed out that VW had already avoided mass layoffs in the early 1990s by introducing the four-day week – a model that could be back on the table.

The collective bargaining negotiations between the group and IG Metall are considered extremely difficult. The employees' side is demanding binding site and employment guarantees, while the group is pushing for a reduction in unit labor costs. If an agreement is reached, experts say it would remain unclear how many jobs would actually be cut and whether individual plants would be shut down or repurposed. VW has always emphasized that it wants to avoid redundancies for operational reasons in Germany.

What is at stake?

Regardless of the outcome of the ongoing talks, economic researchers see the current situation as a litmus test for the future of Germany as an industrial location. A cost-cutting program worth several billion euros and a shift in the product portfolio toward electric cars and software are intended to keep the company competitive in the long term. By the end of the year, the board aims to present a corresponding package of measures – including an answer to the question of which plants can continue to operate and how.

One thing is certain: If four sites were indeed to disappear, this would have significant consequences for the respective federal states, according to regional economists. Lower Saxony, home to the Wolfsburg flagship plant, would be affected, as would Baden-Württemberg with the Audi site in Neckarsulm and Saxony with the ID.3 model's main plant in Zwickau. Industry experts expect the negotiations to continue for several more weeks.