(Source: Audi AG)
Volkswagen announced a “Christmas miracle” with major changes at its German operations but no immediate factory closings, layoffs, or wage cuts. However, about 35,000 jobs will soon be created, but factories must remain open.
This week, Bloomberg reports that Volkswagen and union leaders reached an agreement after 70 hours of negotiations, and following five rounds of negotiations and two major strikes at German auto factories last month, involving around 100,000 workers, the company's largest. history.
VW said it would agree to keep its 10 German factories operating and restore job security agreements until 2030, according to the report. However, the workers agreed to give up bonuses, reduce full-time employment for trainees, and reduce capacity at five factories by about 700,000 vehicles.
The automaker will also cut more than 35,000 jobs in Germany by 2030, but to do so in a “socially responsible way.” The cuts are intended to save about $4.2 billion a year in the medium term, Bloomberg reported.
Volkswagen AG executives are also facing significant pay cuts in the coming years, with around 4,000 executives losing bonuses equal to 10% of their annual salary next year, as well as smaller cuts at the end of the decade. However, senior executives, including CEO Oliver Blume, do not appear to be considering job cuts. But Bloomberg reports that unions are demanding a 10% pay cut from senior leadership, too.
This comes at a time when VW is restructuring its business to cut costs, while seeking to streamline the manufacturing and development process, shaving months off the development cycles of certain projects to help tighten belts, all while rethinking its EV model to last. more competition. Volkswagen is facing a sharp decline in car sales in China, its core market, while at the same time facing challenges from BYD and other Chinese carmakers entering the European market.
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