Key facts
- Volkswagen is reportedly planning to cut 100,000 jobs and close four German plants.
- German political leaders, including Chancellor Friedrich Merz's coalition, have pledged to resist the proposed job cuts.
- The state of Lower Saxony, a significant shareholder in VW, holds considerable power to block the plans.
- VW's supervisory board, which includes representatives from the state and labor unions, is scheduled to vote on the proposal in July.
- A potential spin-off of parts of Volkswagen is being considered as a way to restructure the company and reduce costs.
German politicians are vowing to resist Volkswagen's reported plan to slash 100,000 jobs and close four of its German plants, a move that could represent one of the largest corporate layoffs in history. The proposed cuts, which are expected to be presented to VW's supervisory board in July, are seen as a stark indicator of the struggles facing Germany's manufacturing sector, particularly its automotive industry, due to competition from China and trade policies.
Chancellor Friedrich Merz's coalition government is facing significant political pressure, with the far-right Alternative for Germany (AfD) party gaining traction in polls by criticizing the handling of industrial job losses. Leaders within Merz's coalition have pledged to protect jobs and production sites. Stefan Kornelius, Merz's spokesperson, stated that the primary goal is to safeguard jobs and production sites of German manufacturers.
Volkswagen's unique corporate structure, which includes the state of Lower Saxony as its second-largest shareholder, grants politicians and labor representatives considerable influence. Olaf Lies, the SPD premier of Lower Saxony and a member of VW's supervisory board, along with deputy state premier Julia Willie Hamburg, have expressed opposition to the cost-cutting measures, advocating instead for strategies to regain market share and technological leadership. Lies emphasized that layoffs and plant closures are not viable solutions.
The supervisory board, composed of 19 members, requires a majority vote to approve the proposed changes. Currently, worker representatives and state politicians hold 11 votes, making it likely that the plans will face significant amendments or require additional worker safeguards. Experts suggest that management might be considering a spin-off of parts of the company to gain more autonomy in decision-making, potentially circumventing the constraints of state ownership and union representation.
Volkswagen has declined to comment on internal documents but acknowledged that the Group is undergoing a "profound transformation" and that the Group Executive Board has been developing a strategic restructuring plan. Previous job cut announcements by VW, including a plan for 35,000 job reductions by 2030 agreed upon in late 2024, and a subsequent increase to 50,000 in March, have faced less resistance than the current proposal.