Volkswagen CEO Tours Threatened Plants, Vows Layoffs Will Be a Last Resort

Volkswagen Group CEO Oliver Blume has personally visited the company's plants facing possible closure. On Tuesday he addressed thousands of workers at the flagship plant in Wolfsburg, and on Wednesday he toured two more troubled sites — in Emden and Zwickau — whose futures remain uncertain.

"We are fighting for industrial prospects and jobs at all our plants — together with partners, investors, and through new industrial solutions," Blume told employees at the Emden plant on the North Sea coast.

Emden's future in doubt

The Emden plant was built back in the 1960s to make it easy to load cars directly onto ships. It first produced the legendary Beetle, and later the Passat. Today the plant makes just two electric models, including the commercially successful ID.7, but its long-term future remains unclear.

According to as-yet unconfirmed reports, production of the ID.4 could be moved from Emden to Czechia, while the next generation of the model would be rebranded as the Tiguan. Blume noted that wage costs in Emden are roughly twice as high as at the group's other European plants, and production costs there are significantly less competitive as well.

After meeting with staff, Blume immediately flew by corporate jet across Germany to Zwickau, near the Czech border, where the company bet heavily on electric vehicles — but the plant is now running at reduced capacity due to a lack of orders.

Closure would be the costliest option

Management insists it is searching for alternative uses for the troubled plants, stressing that closure would be a last resort — and also the most expensive one, requiring severance payments, the termination of partner contracts, and asset write-downs worth billions of euros.

"I think we all understand that things can't go on like this at VW, but what we need is clarity, not prolonged uncertainty," said Emden Mayor Tim Kraithoff, who noted that the plant is critical to the entire region's economy.

The group's supervisory board has already approved halving the model lineup and simplifying trim configurations to streamline production. However, the layoff plans are running into resistance from German politicians and unions, who control the majority of seats on the board. The one concrete proposal on the table — converting the Osnabrück plant to produce military equipment for Israeli air defense systems — was blocked by the company's Qatari shareholders, for whom such cooperation proved unacceptable.

German plants cost the group billions

According to Blume, Volkswagen needs to cut around 100,000 of its roughly 650,000 jobs in the coming years, with the vast majority of the cuts falling on German plants he considers unprofitable. If nothing changes, the extra costs of running German facilities will cost the group around 36 billion crowns a year.

Although Volkswagen operates dozens of plants worldwide, including in Czechia, nearly half of all its employees work in Germany, where wage costs run well above the industry average. Any cuts, however, must be approved by the supervisory board, half of whose 20 seats are held by unions, with two more held by representatives of the state of Lower Saxony, which owns a stake in the company. Both groups reject Blume's plan and are preparing their own proposals to rescue the automaker.

Unions question the very premise of the crisis assessment and are demanding that management first present a plan for winning back customer trust and technological leadership — and only then calculate how many employees are actually needed. "There is still no clarity on what further staff cuts would mean for individual brands and plants, including the flagship factory," said works council chief Daniela Cavallo.

Back in 2024, management already reached an agreement with unions on a major cost-cutting program that will eliminate around 50,000 jobs in Germany by the end of the decade. Blume argues this isn't enough — another 25,000 positions need to go in Germany specifically, with only a quarter of the total 100,000 threatened jobs to be cut outside the country.

The reason cited is a sharp drop in sales in China combined with U.S. tariffs, which are forcing the group to operate more efficiently. Besides the layoffs, four German plants remain under threat: Emden, Zwickau, Hanover and Neckarsulm. According to Blume, none of them currently has a secure outlook beyond 2030, although solutions are actively being sought.

Meanwhile, the group's Czech plants, run by Škoda, continue to post strong results. While the group's overall margin fell short of 4% in the first half of the year, Škoda's stayed above 8%.

Source: seznamzpravy.cz