Volkswagen CEO flags 50,000 extra job cuts to staff as costs squeezed
Volkswagen Faces Pressure to Cut Costs Amid Fierce Competition
(Corrects story to delete extraneous word "boost" in the first paragraph.)
By Rachel More
CEO Oliver Blume's Memo Highlights Job Cut Plans
BERLIN, July 13 (Reuters) - Volkswagen may need to cut about 50,000 extra jobs to keep up with rivals in an increasingly fierce car market, its CEO told staff in an internal memo, effectively confirming for the first time that the automaker is looking to reduce up to 100,000 positions.
CEO Oliver Blume is battling to streamline Europe's biggest carmaker, whose profits have slumped as it faces billions of euros in tariff costs, stiff competition in China and pressure on its German manufacturing network to become more efficient.
Cost Disadvantage and Further Reductions
After already agreeing 50,000 job cuts across the group, including its Porsche and Audi subsidiaries, the company must work on reducing costs further, having calculated a cost disadvantage versus comparable companies of 20%, Blume said in the memo seen by Reuters.
This means a "theoretical deduction" of another 50,000 jobs worldwide, the memo said.
"We are currently assessing across all brands, companies and regions how many adjustments are actually necessary and feasible," Blume said in the document.
'Intelligent Solutions' Preferred to Plant Closures
The company had previously declined to comment on reports it was considering up to 100,000 job losses.
The memo follows angry calls from workers for management to explain its restructuring plans, which Blume presented to the company's supervisory board on Thursday.
Labour Representatives and Plant Uncertainty
Sources familiar with the matter said labour representatives on the committee blocked the proposals, which were said to include job cuts and the possible closure of four factories.
Future of Emden, Hanover, Zwickau, and Neckarsulm Plants
"As of today, we still cannot confirm competitive use cases for the plants of Emden, Hanover, Zwickau and Neckarsulm in the 2030s," Blume said in the memo.
He said he preferred "intelligent solutions" over closures, having previously pointed to the defence industry or the production of Chinese Volkswagen models in Europe as options for underutilised factories.
Company Statement and Next Steps
Volkswagen made no mention of job cuts or plant closures in its statement following Thursday's talks with key stakeholders.
Instead, the company announced plans to further reduce its production capacity and gradually halve its sprawling line-up of models — measures that analysts said fell short of solving Volkswagen's current woes.
Ongoing Discussions and Search for Solutions
"Of course, it's understandable that not everything has been planned out down to the last detail yet, and that certain issues still need to be further discussed and evaluated," Blume said in his message to workers.
"There will certainly be more meetings in which we will work hard to find the best solutions."
(Reporting by Rachel More. Editing by Matthias Williams and Mark Potter)