Volkswagen Might Go Back on Its No-Closure Pledge

Germany's Volkswagen has announced that it might close plants in its home country due to the growing challenges in the auto industry. This decision necessitates dropping a job protection promise, in effect since 1994, that would have prevented layoffs through 2029. CEO Oliver Blume commented that the European automotive industry is facing significant pressures from new market entrants and Germany's weakening role as a manufacturing hub.

Volkswagen is struggling to compete with low-cost Chinese electric vehicles, and its mid-year results indicate the company will not meet its 2026 target of 10 billion euros in cost savings. The core brand's operating earnings dropped from 1.64 billion euros to 966 million euros in the recent period. Although cost-cutting measures such as early retirements and buyouts have been implemented, they may not be adequate to stave off additional measures.

Union and worker representatives strongly oppose potential plant closures or layoffs. Thorsten Groeger from IG Metall criticized management's approach, stating it risks "destroying the heart of Volkswagen." Associate Daniela Cavallo accused management of attacking employees and vowed that "there will be no plant closings with us." Stephan Weil, the governor of Lower Saxony and a member of Volkswagen's board, acknowledged the need for cost reductions but urged the company to consider other solutions. (This story was generated by Newser's AI chatbot. Source: the AP)