FRANKFURT (Reuters) – Volkswagen (ETR:) sees no chance of avoiding layoffs and factory closures to save 4 billion euros ($4.2 billion) in costs, the brand’s CEO said in a newspaper interview, amid an escalating dispute with employees.
Thomas Schaefer’s comments further deepen the conflict with the unions. They have threatened strikes at the carmaker from December and asked the company to present solutions in ongoing negotiations over wages and capacity that rule out both factory closures and major job cuts.
“Ultimately, any solution must reduce both overcapacity and costs. We can’t just put a band-aid on it and drag it on. That would come back to bite us in a serious way later,” Schaefer told the weekly Welt am Sonntag. .
Schaefer said most of the targeted job cuts at the German automaker, which the group did not quantify, could be done through normal attrition and early retirement, but added that this would not be enough.
“It would simply take too long. There is no point in delaying the restructuring until 2035. By then, our competition would have left us behind,” he said, adding that VW’s restructuring should preferably be done within three to four years.
In addition to job losses and factory closures, Volkswagen has also asked employees of the VW AG division, which is at the center of the current conflict, to take a 10% pay cut.
Schaefer said there was no hope at this point that demand in Europe would recover significantly. He also noted that labor costs at Volkswagen’s German facilities were roughly twice as high as those of comparable companies and VW’s own facilities in southern and eastern Europe.
He said ongoing savings efforts have resulted in a positive impact on profits of around €7.5 billion, with a further €4 billion in savings required.
Schaefer said the company currently sees no way to avoid factory closures in Germany, with possible closures affecting not only car factories but also parts locations.
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