Volkswagen CEO Oliver Blume has confirmed plans to cut 50,000 more jobs as part of a sweeping restructuring, despite the supervisory board rejecting his proposal to shut four factories in Germany. Speaking to staff on Monday, Blume described the plan as "the most comprehensive realignment in the company's history," comprising 12 initiatives, approximately 150 pages, and 45 individual resolutions.
Details of the restructuring plan
Blume acknowledged that the proposals include "some decidedly controversial decisions," but said he perceived "broad support on the supervisory board" for his analysis of the group's future and the need for action. The board spent hours last Thursday hearing Blume's proposals, which were previously leaked, as staff protested at Volkswagen, Audi, and Porsche sites across Germany.
Blume, who joined Audi at 28 and rose through the ranks to lead Porsche before taking over the entire group in 2022, said he understands the deep concern among employees. "I can fully understand how deeply the current situation affects people within the company, as well as everyone in its immediate circle. I have spent my entire professional life with the group," he told staff.
Job cuts and workforce reduction
Blume confirmed that the 2024 programme to reduce the workforce by 50,000 jobs is already being implemented in a "socially responsible manner," involving voluntary redundancy packages and partial retirement arrangements. The company has already cut 37,000 jobs through these schemes, but a second phase of cuts is now necessary to reduce overheads. Blume warned that a further 50,000 jobs may be cut if costs are not reduced, noting that company benchmarking puts its overheads at 20% above comparable companies. "Since half of our overhead costs result from personnel costs, a theoretical calculation – assuming no change in labour costs – would result in the elimination of approximately 50,000 positions worldwide," he said.
Production capacity and plant concerns
Volkswagen intends to reduce annual car production from a pre-pandemic level of 12 million to 9 million. In the past two years, the company has already cut production by 2 million units, with another 500,000 to be cut from production in China, where it faces intense local competition. Blume said the company "must continue on this path" of reducing overheads by 20% at its factories, including cutting half of its model lineup, especially variants of different brands.
The fate of four factories remains uncertain: three Volkswagen plants in Emden, Hanover, and Zwickau, and the Audi plant in Neckarsulm, where production is scheduled to end between 2031 and 2034. Blume told staff that "smart solutions are always better than closing a plant," but added that "Germany cannot turn a blind eye" after the car market was flooded with unsold cars from both China and Europe.
Alternative options and union response
The company is exploring alternative options for factories to secure jobs. Blume said advanced discussions are ongoing about transforming the Osnabrück factory from automotive to defence production. However, over the weekend, it was reported that a plan to make vehicles supporting Israeli defence company Rafael at Osnabrück was blocked by Qatar's sovereign wealth fund, which holds a 10% stake in VW.
IG Metall, the main staff union, declined to comment on Blume's latest remarks but previously criticised the plans. Christiane Benner, chair of IG Metall, said the proposals are unacceptable, especially given the union's previous concessions. "Instead of taking this achievement as a model, the board is confronting employees with new downsizing plans. Understandably, the resulting anger and uncertainty are immense. We need new ideas and concepts for utilising plant capacity, sensible considerations from the company," she said.
