The chief executive of Volkswagen has confirmed plans to cut 50,000 more jobs despite the carmaker’s supervisory board rejecting his plan to shut four factories in Germany.
Oliver Blume told staff on Monday that proposals for a sprawling restructuring was “the most comprehensive realignment in the company’s history” and revolved around “12 initiatives, approximately 150 pages and 45 individual resolutions” for change.
In his most detailed explanation of the management blueprint for the future, Blume told staff that “despite some decidedly controversial decisions” on the table, he had perceived “broad support on the supervisory board” of his analysis of the group’s future and the need for action.
Last Thursday, the board spent hours hearing Blume’s proposals, previously leaked, with staff protests at all sites for Volkswagen, Audi and Porsche brands across Germany.
Asked about staff concerns about jobs, Blume – who has positioned himself as a Volkswagen insider – said he was “doing everything in his power” to keep the company competitive enough to survive. He promised to enter into “constructive discussions” with staff.
Blume joined Audi at 28, working as a planner in its body shop and paint operations, before rising through the ranks to head Porsche and then taking on the leadership of the entire group in 2022.
“I can fully understand how deeply the current situation affects people within the company, as well as everyone in its immediate circle. I have spent my entire professional life with the group,” he said.
He said the 2024 programme to reduce the workforce by 50,000 jobs was already taking place in a “socially responsible manner” involving voluntary redundancy packages and partial retirement arrangements. The company has already cut 37,000 jobs from the workforce through these schemes, but a second phase of cuts aimed at reducing overheads was now necessary, he added.
Blume said in the memo that a further 50,000 jobs may now be cut if the carmaker’s costs were not reduced.
He said company benchmarking put its overheads at 20% above comparable companies.
“Since half of our overhead costs result from personnel costs, a theoretical calculation – assuming no change in labour costs – would result in the elimination of approximately 50,000 positions worldwide,” he said.
He confirmed there was still a question mark over four factories, three Volkswagen plants – in Emden, Hanover and Zwickau – and the Audi plant in Neckarsulm, where production is scheduled to end between 2031 and 2034.
Blume told staff that “smart solutions are always better than closing a plant” but that “Germany cannot turn a blind eye” after the car market was flooded with cars that are not needed, both from China and Europe.
The group intends to reduce production of cars from a pre-pandemic level of 12m cars a year to 9m, he said, as the wider automotive industry in Germany warned of potential job collapse if overproduction was not addressed.
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In the past two years, Volkswagen has already reduced production by 2m, with another 500,000 units to be cut from production in China, where the carmaker is facing huge pressure from local competition too.
Blume said the company “must continue on this path” of reducing overheads by 20% at its factories, including cutting half of its model lineup, especially the variants of different brands.
The company is also exploring alternative options for factories to secure jobs. He said it was still in advanced discussions about the transformation of its factory in Osnabrück from automotive to defence production.
Over the weekend, it was reported that a Volkswagen plan to make vehicles supporting the Israeli defence company Rafael – designed to protect jobs at Osnabrück – had been blocked by Qatar’s sovereign wealth fund, which has a 10% stake in VW.
IG Metall, the main staff union, had no comment on Blume’s comments but hit out against plans last Thursday.
Christiane Benner, the chair of IG Metall, said the proposals were unacceptable particularly as the union had already made concessions.
“Instead of taking this achievement as a model, the board is confronting employees with new downsizing plans. Understandably, the resulting anger and uncertainty are immense. We need new ideas and concepts for utilising plant capacity, sensible considerations from the company,” she said.