The Volkswagen Group’s crisis in Europe could force several factories to close, but VW’s works council believes this can be avoided. The employee-led group recently proposed a sweeping cut in wages for both blue-collar and white-collar workers. Works council leader Daniela Cavallo thinks this would be enough to prevent mass layoffs and the possible closure of VW factories in Germany.
Cavallo presented this information during a press conference ahead of renewed negotiations with VW management, reports said Automotive News Europe. The cuts include pay cuts and suspended bonuses for virtually everyone at the company, including executives and board members. Cavallo stated that labor costs are actually only a small part of the $18 billion that VW management wants to save.
The proposal comes amid news that VW’s labor costs are significantly higher than those of other German carmakers. Documents obtained by Reuters show that 15.4 percent of VW’s sales in Germany are spent on labor, compared to a range of 9.5 to 11 percent for Stellantis, BMW and Mercedes-Benz. The average hourly wage for VW employees in the country is $66 per hour.
In defense of labor costs, the works council highlights the struggle at other companies in the VW Group, such as Porsche, Audi and VW Financial Services. The council claims that these companies’ revenues fell in the first three quarters of 2024, costing VW $5.8 billion.
Either way, VW is facing a financial crisis that could ultimately lead to three of its six factories in Germany closing for good. This includes the Transparent Factory in Dresden, a relatively small facility where the ID.3 is currently being built. The sprawling factory in Osnabrück, where Porsche builds the 718 twins, is also on the chopping block. They will soon be out of production in lieu of electric replacements. Osnabruck also builds the Volkswagen T-Roc Cabriolet, Europe’s most popular mainstream convertible.