Volkswagen factory in São Bernardo do Campo (SP), where four models of the brand are produced. Celso Tavares/g1 Volkswagen worker representatives blocked a broad restructuring plan for the company, two sources told Reuters this Friday. The episode highlights the difficulties faced by executive president Oliver Blume in reformulating Europe's largest automaker. Blume is trying to make the group more efficient at a time when Volkswagen faces rising Chinese competition, billions of euros in costs associated with tariffs imposed by the United States and doubts about the competitiveness of its factories in Germany. ? Volkswagen's governance structure, however, makes decision-making more complex. This is because worker representatives and the State of Lower Saxony control the majority of seats on the company's supervisory board. In a meeting held on Thursday (9), the supervisory board rejected by 12 votes to 7 the restructuring proposal presented by the board, following opposition from worker representatives, according to sources.
Workers block Volkswagen's restructuring plan, agency says
Volkswagen factory in São Bernardo do Campo (SP), where four models of the brand are produced. Celso Tavares/g1 Volkswagen worker representatives blocked a broad restructuring plan for the company, two sources told...
Sources familiar with the discussions had previously told Reuters that Blume's proposal included cutting up to 100,000 jobs and the possible closure of four factories in Germany. Amid pressure on the company, Volkswagen reported this Friday an 8.6% drop in second-quarter deliveries, the biggest decline in four years. Analysts see a lack of concrete measures in the plan After the meeting, Volkswagen released a statement. Analysts, however, stated that the so-called "plan for the future" brings few concrete measures and highlights the board's difficulty in moving forward with deeper changes. In the statement released on Thursday night, Volkswagen did not mention job cuts or factory closures. Instead, it reiterated already known goals to simplify its operations, measures that did not even require approval from the supervisory board. Analysts at Jefferies said there was "no indication of progress toward a deal." Bernstein analysts said the plan is "full of ideals, but very poor in concrete measures." Some analysts, however, positively assessed the simplification proposals, which include reducing global production capacity from 10 million to 9 million vehicles per year and cutting the number of models offered by up to 50%. The restructuring would gradually reshape the group's portfolio, which brings together high-volume brands such as Volkswagen and Skoda, as well as sports car maker Porsche and luxury brand Lamborghini. Unions demand details of the plan after protests IG Metall, Germany's largest industrial union, held demonstrations at Volkswagen units across the country this Thursday and demanded a clear strategy from the company to guarantee production in the future. The works council demanded that the company clarify, by the end of this Friday, its cost reduction plans. Volkswagen's current labor agreement limits strikes, but unions have threatened to expand the protests if the company tries to review its commitments to job security. Despite the tensions, both sides agree on the scale of the challenges facing Volkswagen, whose profit margins have halved in the past five years due to a weak Chinese market, the costs of electrification and trade tariffs. German Chancellor Friedrich Merz has promised to implement reforms to increase the country's competitiveness amid difficulties faced by key industrial sectors. "Everyone involved is aware that Volkswagen and the automobile industry face a critical moment in an increasingly challenging international competitive environment," said Olaf Lies, Prime Minister of the State of Lower Saxony. Sources familiar with the matter said Lower Saxony, where Volkswagen is headquartered in Wolfsburg, tried to broker a compromise during supervisory board discussions. According to one of the sources, the state government even planned to present its own proposal, but the idea ended up being abandoned. The source did not provide further details. The government of Lower Saxony declined to comment on the matter.
