VW Savings Plans by CEO Blume Met with Sharp Protest from Employees

What the Austerity Course Is About

At its core, Blume's program aims to significantly reduce costs outside actual vehicle production. According to information from the company's environment, this concerns primarily administration, development, and other indirect areas. Group leadership justifies the steps with a strained earnings situation and pressure from global competition, particularly from manufacturers in Asia as well as sluggish demand for electric vehicles in Europe.

Four Plants Under Review

Which sites would specifically be affected has not yet been conclusively decided. According to available information, four German plants are under review: the Zwickau plant in western Saxony, the Emden plant in northwestern Lower Saxony, the Audi site in Neckarsulm, and the Hannover plant, where large sedans and light commercial vehicles are produced. The Wolfsburg headquarters has also been the subject of intense discussion for weeks.

Three Resolutions for the Supervisory Board

Meanwhile, both the state of Lower Saxony and the employee side are preparing their own counterproposals to resolve the group's crisis. A total of three resolutions are to be submitted for vote at the next meeting of the supervisory board. Spokespersons for the supervisory board, the state, and the works council declined to comment on the ongoing negotiations. What is certain is that Lower Saxony, as the largest single shareholder after Porsche SE, plays a special role, and Minister-President Olaf Lies is critically accompanying the company's course.

Works council chair Daniela Cavallo, who had only recently joined the supervisory board, made clear in recent days that she rejects an austerity course at the expense of the core workforce. She is instead calling for investments in new models and the preservation of all sites. IG Metall also announced that it would vigorously oppose any plant closures or redundancies for operational reasons. The union is already preparing warning strikes at several sites.

Mood Among the Workforce

Observers interpret the chorus of whistles as a warning signal to group leadership. The workforce is making clear that it does not want to bear the restructuring alone and expects a say in the selection of savings measures. Should there be an escalation at the next supervisory board meeting, industry-wide reactions are threatened, as Volkswagen is regarded in Germany as one of the largest industrial employers.

The federal government is also closely monitoring developments. The Federal Ministry of Economics said it was in contact with the company and the state of Lower Saxony. Should site closures occur, possible aid and transformation programs would be discussed. Direct subsidization has so far been ruled out, however.

Outlook for the Coming Weeks

The time pressure on Volkswagen is high. In the coming quarter, the board wants to present the details of the savings program to the supervisory board for a final decision. Until then, the tone in Wolfsburg is unlikely to become quieter. Employees have already announced further protest actions should group leadership stick to its original plans.