Germany’s government is exploring ways to support ailing Volkswagen, Economy Minister and Vice-Chancellor Robert Habeck said Thursday in response to concerns about potential job cuts at the nation’s largest automaker.
Volkswagen said this month it needed to cut costs significantly at its namesake brand in Germany, citing high costs, low productivity and fierce competition.
“VW is of central importance to Germany,” Habeck told reporters. The minister will visit a VW plant in the city of Emden on Friday.
Habeck declined to comment on a report in the German monthly business magazine Manager Magazin, which said that some within the company reckon the group’s German workforce would have to come down by 30,000 over the mid-term, or about 10% of the Volkswagen Group’s total German workforce. It did not cite sources.
That number, which has been frequently cited in the past with regard to potential job reductions at Volkswagen in Germany, “has no basis whatsoever and is simply nonsense,” a spokesperson for the carmaker’s works council was reported as saying by Reuters.
A separate report by Deutsche Presse-Agentur (dpa) also cited a spokesperson for the company as declining the Manager Magazin report.
“One thing is clear: Volkswagen has to reduce its costs at its German locations,” the spokesperson said. “This is the only way the brand can earn enough money for future investments.”
Management and unions are set to start negotiations next week on replacing long-standing wage agreements that Volkswagen canceled earlier this month along with threats to close plants in Germany for the first time in history.
Chief Financial Officer (CFO) Arno Antlitz is planning to cut funds for investments over the next five years to 160 billion euros, according to the Manager Magazin.
VW had previously set its medium-term planning target for the period from 2025 to 2029 at 170 billion euros.
VW is struggling with high costs in its core brand, VW Passenger Cars.
The carmaker has terminated its decades-old job security agreement with unions in Germany, and plant closures and layoffs are on the table.
Brand chief executive Thomas Schafer wants to raise the operating return to the target level of 6.5% in the coming years. Negotiations with the trade union IG Metall begin next week.
According to Manager Magazin, the axe will be taken to the research and development departments in a bid to reduce costs.
Of the approximately 13,000 employees in those areas in Germany, some 4,000 to 6,000 will have to take their leave, according to some forecasts. Partial retirement and severance payments would not be sufficient to cover the numbers.
For years, investors have been criticizing VW’s spending on investments, saying that this also reduced financial leeway for dividends for shareholders.
