Volkswagen CEO Olivier Blume faced a huge booing crowd in Germany today, telling tens of thousands of workers that the company isn’t operating in “a fantasy world” and that plants will be closing and jobs will be lost. Here’s the latest.
On Monday, a hundred thousand workers walked off at nine Volkswagen factories across Germany, including its EV-only factory, bringing assembly lines to a grinding halt in the battle over the slashed pay, lost jobs, and the automaker’s future. Now Blume is locked in an intense dispute with IG Metall, with management pushing for major cuts while workers are threatening more strikes if a fair deal isn’t met.
Today, a group of about 20,000 workers at VW’s main plant in Wolfsburg listened to Blume make the claim that the company has its hands tied. “As management we are not operating in a fantasy world. We are making decisions in a rapidly changing environment,” he told workers, according to Automotive News Europe. Blume added that he grew up in the region and Wolfsburg was close to his heart, but that sentiment was met with roaring boos from the crowd.
Volkswagen and IG Metall are scheduled to meet for a fourth round of talks on December 9.
The strike comes after weeks of collective bargaining negotiations in which Volkswagen didn’t back down from its plan to potentially cut thousands of jobs and close factories in Germany – a first in the automaker’s 87-year history in the country. Volkswagen plans to close at least three factories, lay off thousands of workers, and trim pay for those remaining by 10%, all as it fights to stay alive amid stiff competition from China. Volkswagen announced that it would officially close its Audi plant in Brussels where it makes the Audi Q8 E-Tron.
“The price pressure is immense,” Blume said, adding that VW was struggling in its biggest market China and that labor costs in Germany were too high to compete. “We therefore urgently need to take measures to secure the future of Volkswagen,” he said, according to the report. “Our plans for this are on the table.”
A rough comparison of wage data from 2023 shows that, on average, the hourly wage for a worker in the German automobile industry is about 33 euros ($34,72), which has been mostly unchanged in the past few years. Looking at autoworker wages in China, a Reuters analysis of 30 auto firms in the country, including Tesla, SAIC, and Xpeng, shows hourly wages of 14 yuan ($1.93) to 31 yuan ($4.27). BYD posted a position last year at its Shenzhen factory with a monthly income starting at 5,000 yuan, or $688.
Top comment by Aigars Mahinovs
IG Metall offered quite a few ideas on how costs could be managed without cutting workers or factories. And also how doing cost cutting in that way will save the company much more in the future when they will not need to again recruit and train up completely new workers in the environment of very dire lack of qualified workers in Germany. Sometimes CEOs have problems thinking beyond then next year while a worker in Germany is used to planning things a decade ahead.
Meanwhile, Blume makes about $10 million a year, with reports saying that wage cuts haven’t included his own. VW’s labor council head Daniela Cavallo has criticized Blume for not being willing to make sacrifices in management and among the shareholders. She said the union is aiming for a deal to be finalized by Christmas. “That will mean compromises. Concessions too. Things that you don’t like and that sometimes hurt you one way or another. But that has to apply to all sides,” she said. “Otherwise, it’s not a compromise.”
This comes at a time when VW is radically restructuring its business to cut costs, while seeking to streamline production and development processes, shaving off months on the development cycles of specific projects to help tighten the belts, all while rethinking its EV retail model to stay more competitive. Volkswagen has been facing a steep decline in sales in China, which is its core market, while simultaneously facing challenges from BYD and other Chinese automakers entering the European market.
As an aside, the strikes didn’t spread to its factories in the US, where many workers are unrepresented by unions. The United Auto Workers represent only one Volkswagen plant in Chattanooga, Tennessee, but they were not involved in the European strikes.
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