The VW car company is in deep crisis. Sales are declining and the manufacturer is earning less and less on the vehicles sold. Now boss Oliver Blume is also planning cuts among the staff. Three factories could be closed. This also threatens Austrian companies; more than 900 companies are active in the supply industry.
The problems at VW have been piling up for years and now the board must put on the brakes. The company changes course and also applies the red pencil to its employees: breaking a taboo!
Heavy austerity measures are planned
Four billion euros need to be saved, 30,000 jobs are at risk. Ten percent salary cuts for everyone and zero pay rounds for 2025 and 2026 are on the table. Even the locations in Germany are no longer untouchable. Three could close, the others will shrink. Works Council Daniela Cavallo is indignant: “It is the firm intention to bleed the production regions dry and the clear intention to send tens of thousands of VW employees into mass unemployment.”
Above all, boss Oliver Blume is criticized. VW earned very well in China for a long time and was able to compensate for lower profits in Europe, but the Chinese market has collapsed. At the same time, the demand for electric cars is decreasing. This recently allowed the group to compensate for its ailing combustion engine activities for a long period of time. Because VW, as a mass manufacturer, generally does not have the highest profit margins, the global car crisis is now hitting the group particularly hard.
The factories in Germany are also ‘twice as expensive as the competition’, it is said. We must become competitive again, otherwise significant investments in the future would not be affordable. The board did not want to say anything concrete about the savings plans yet; There will be news about this at the collective labor agreement meeting on Wednesday.
Austrian suppliers are worried about their orders>
The problems at Germany’s largest car manufacturer are also putting pressure on domestic companies. 900 companies produce for the automotive industry. For example, Voest, ZKW and Miba count the Volkswagen Group among their customers. In fact, 300 companies in Austria are pure vehicle suppliers. More than 200,000 people work in the sector.
With an export share of 65 percent, Germany is by far the most important market for car companies. The fact that sales figures are declining is already having direct consequences. “60 percent supplies directly to the major producers,” says Clemens Zinkl of the supply sector (WKO). Domestic companies are relatively high in the chain. They are sitting on the warehouses, causing liquidity problems. In some cases, manufacturers don’t even call orders.
Thousands of jobs are also at stake in Austria
There are fears that a contraction of the European car industry will cost suppliers orders and put thousands of jobs at risk here too. The metal technology industry is already cutting around 8,000 jobs this year, many of them at automotive suppliers. If the car industry leaves Europe, there is also the fear that suppliers will receive orders elsewhere.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
