Volkswagen CEO Oliver Blume has defended the company’s agreement with unions to eliminate 35,000 future jobs in Germany, calling it a positive step for the carmaker’s long-term sustainability.
“The agreement is good news for Volkswagen,” Blume said in an interview with Frankfurter Allgemeine on Sunday. “It is the basis for us to be an economical and reliable employer for many thousands of people in the long term.”
The deal, finalized after over 70 hours of intense negotiations, was framed as essential to prevent widespread strikes and secure Volkswagen’s future competitiveness. The agreement aims to address overcapacity issues at German sites while maintaining the company’s position in a challenging global market.
Key outcomes of the deal
- No immediate closures or layoffs: Volkswagen pledged not to close any German sites or impose operational layoffs, though it is exploring options for its Dresden plant and considering repurposing the Osnabrück site, possibly involving a sale.
- Cost savings: The measures are expected to save the company €15 billion annually in the medium term, without impacting its 2024 financial guidance.
- Relocation and downsizing: Some production will shift to Mexico, aligning with the company’s strategy to optimize costs.
Union leaders, including works council chief Daniela Cavallo, praised the agreement as a “Christmas miracle.” Cavallo emphasized that the deal secures Volkswagen’s wage agreements and ensures no operational layoffs. Volkswagen echoed this sentiment in a statement, highlighting the cooperative nature of the negotiations: “The company and the works council will work together to ensure the long-term success of Volkswagen AG.”
However, there are sacrifices. Around 4,000 managers will see their salaries cut by 10% starting in 2025, with gradual reductions lasting until 2030.
