Volkswagen CEO Faces Growing Conflict Over Restructuring and Job Cuts
By Rachel More, Andreas Rinke and Christina Amann
Volkswagen Restructuring Plan Faces Opposition
BERLIN, Aug 25 (Reuters) - Volkswagen CEO Oliver Blume faces fresh opposition to his restructuring plan at the carmaker's supervisory board meeting next week, with two rival proposals submitted by labour and state government stakeholders, sources told Reuters on Tuesday.
The news came after Blume addressed over 10,000 workers at Volkswagen's headquarters in Wolfsburg, the first stop on a tour of German plants this week to win support for a plan involving far-reaching job cuts and possible plant closures, adamantly opposed by staff but supported by the group's owner families.
The CEO gets a second shot at securing the necessary support for his cuts on September 4, after failing to do so at the last supervisory board meeting in July.
Alternative Proposals and Stakeholder Conflict
This time, labour representatives and major shareholder Lower Saxony have drawn up alternative turnaround proposals for the automaker, three people familiar with the matter said, highlighting just how deep the conflict over the scope of Volkswagen's overhaul runs among its stakeholders.
Spokespeople for Volkswagen's supervisory board, the works council and Lower Saxony declined to comment. The contents of the proposals were not clear.
Worker Response to Restructuring
VW Workers Boo Blume
Blume has warned that Volkswagen must radically cut costs and complexity as growing competition from China, costly tariffs and a drop in demand for its cars put its traditional business model under unprecedented pressure.
He has warned that 50,000 job cuts could be necessary to keep Volkswagen competitive — roughly double the redundancy programmes already agreed with unions — and initiated efforts to pare back the group's model line-up and production capacity.
"Our plan for the future is the largest transformation programme in our company's history. To make this happen, everyone needs to pull together now," Blume said in Wolfsburg's packed Hall 11.
Reactions from the Workforce
One source said his speech was met with boos from the crowd. Banners bore slogans such as "Our jobs are not your balance sheet adjustments" and "Respect is not up for negotiation", according to another source.
Speaking on behalf of the workforce, Volkswagen labour leader Daniela Cavallo said German factories were "an integral part" of the group, reiterating her opposition to closures.
"Our trust in this company's executive board, and especially in its CEO Oliver Blume, has been damaged. Not yet beyond repair, but damaged nonetheless," she said, according to excerpts of her speech shared by the works council.
"Cooperation is possible, but if VW management chooses only to pursue a path of layoffs and cutbacks, we will oppose it with all our might," IG Metall union representative Thorsten Groeger said in a statement after the meeting.
CEO's Position on Closures and Alternatives
Closures Are Last Resort, CEO Says
In his speech to workers, excerpts of which were shared by the company, Blume stressed that the 50,000 job cuts were based on a theoretical benchmark to bring Volkswagen's costs into line with competitors.
He also said that no decision had been taken on factory closures, which he called the "last and most expensive resort".
Exploring Alternative Solutions
Blume has previously said that partnering with the defence sector or bringing production of models currently made for the Chinese market to Europe may offer preferable solutions to address overcapacity at German plants.
Management has yet to announce any breakthrough on these proposals, with automotive production set to end in its plant in Osnabrueck as early as next year.
Four other plants — Emden, Zwickau, Neckarsulm and Hanover — are lacking future prospects from 2030.
(Reporting by Rachel More, Christina Amann and Andreas Rinke; Editing by Kirsti Knolle, Louise Heavens and Jan Harvey)
