140,000 Volkswagen Jobs At Risk? CEO Pushes Massive German Cost-Cutting Drive

Volkswagen CEO Oliver Blume has urged employees at the automaker’s Emden plant in Germany to step up cost-cutting efforts, warning that the facility remains significantly more expensive than comparable sites across Europe and could face an uncertain future beyond 2030.

“This journey is not over. Because we not only measure ourselves against our own past performance. We measure ourselves against the best locations in Europe,” Blume told workers, according to excerpts of his speech released by Volkswagen on Wednesday.

Blume said labour costs at the German site were more than twice those at comparable European locations, while factory costs were also considerably higher.

“Labour costs today are more than double those of comparable European locations. And when it comes to factory costs, other plants are still significantly cheaper. This is not a criticism — it is the reality against which we must measure ourselves,” he said.

Emden, located in Lower Saxony, is one of four Volkswagen plants in Germany without a confirmed business plan beyond 2030. The facility manufactures electric vehicles and has become a key focus of the automaker’s broader restructuring programme.

Blume is visiting Volkswagen facilities across Germany this week to build support for an overhaul aimed at reducing costs and improving competitiveness. He has described closing factories as an expensive last resort.

He also told workers that Volkswagen would continue seeking ways to preserve industrial activity and employment even if it cannot secure the plant’s existing future.

“We will fight for industrial prospects and jobs at our locations, with partners, with investors, and with new industrial solutions,” Blume said.

Job Cuts Could Reach 140,000

The cost-cutting campaign has heightened tensions between Volkswagen management and its powerful labour representatives. Unions have warned that the restructuring could ultimately put as many as 140,000 jobs at risk.

Blume and Volkswagen brand chief Thomas Schäfer are scheduled to present their restructuring plans at the company’s main Wolfsburg facility, beginning a series of meetings with employees across Germany.

Management has indicated that its plans could result in the elimination of up to 100,000 jobs. Labour representatives estimate that a further 40,000 positions could be threatened if four German plants without long-term plans are eventually closed.

Blume has previously dismissed the prospect of plant closures during the current decade as unrealistic. Nevertheless, the possibility has intensified tensions with unions.

IG Metall chief Christiane Benner has criticised Blume’s target of cutting costs while lifting Volkswagen’s margin to 9%, describing the plan as “cloud cuckoo land”. A local union leader has also warned that workers could consider strike action if management refuses to reconsider its proposals.

Volkswagen Faces Mounting Cost Pressure

The restructuring is central to Blume’s tenure as CEO as he attempts to reposition Volkswagen amid the rapid shift towards electric vehicles and software-driven cars, alongside growing competition from Chinese manufacturers.

Volkswagen’s governance structure makes the process particularly complicated.

Management needs the backing of powerful labour representatives as well as the government of Lower Saxony, which holds significant influence over major decisions involving the automaker.

The company has been hit by weaker sales in China, high production costs in Germany and underutilised factories.

Volkswagen faces a cost disadvantage of around 30% compared with some competitors and has identified at least €10 billion in overhead costs that need to be eliminated.

Management is also considering cutting another 500,000 vehicles from annual European production capacity, reducing managerial layers and simplifying its portfolio by cutting the number of models and equipment variants.

Labour representatives’ estimate of up to 140,000 potential job losses combines around 50,000 reductions already agreed in Germany, another 50,000 positions that management has indicated could be eliminated globally, and roughly 40,000 jobs linked to the four German plants whose longer-term futures remain uncertain.