Volkswagen is considering shutting four German factories and ramping up job cuts to as many as 100,000, two people familiar with the matter said on Friday, in what could be the biggest ever overhaul in the automotive industry.
Details of the planned closures
Members of VW's supervisory board have been informed of the plans, which are due to be discussed at a July 9 meeting, the people said. Closing the plants at Hanover, Zwickau, Emden and Audi's Neckarsulm site would put more than 45,000 jobs at risk, according to the sources. That would add to the 50,000 cuts that are currently planned.
Reasons behind the overhaul
The move comes as the carmaker faces mounting pressure from Chinese rivals, stiff tariffs on car imports into the United States, as well as dwindling demand in Europe, which the company has said makes its business model unsustainable. Volkswagen CEO Oliver Blume presented the plans to senior executives earlier this week to rally support for deep cuts likely to face fierce resistance from unions and the state of Lower Saxony, the carmaker's second-largest shareholder.
Historical context
In absolute terms, laying off 100,000 people and axing four assembly plants would be the largest restructuring in automotive industry history. It would be comparable to major shake-ups by GM leading up to and during its 2009 bankruptcy and in the early 1990s when it cut as many as 74,000 jobs over four years and shut or idled 21 plants.
Investment reduction
The overhaul was first reported by Manager Magazin, which also said the world's No 2 automaker would cut investment by about 15% to just over €130 billion ($148 billion) over the next five years.
