Volkswagen Executives Clash With Workers in Germany Over Possible Plant Closures

By David Sachs

Volkswagen executives intent on cutting costs clashed with workers in Germany who face the possibility of unprecedented plant closures in the carmaker's home country as electric-vehicle demand lags and competition intensifies.

Chief Financial Officer Arno Antlitz made his case in a speech at a meeting with the works council in Wolfsburg on Tuesday, blaming a depressed auto market that hasn't recovered from the pandemic doldrums. He said the group, which includes the flagship VW brand as well as Audi and Porsche, is short around half-a-million sales--two factories' worth--and must improve productivity and cut costs at German plants to make ends meet.

"We have been spending more money at the brand than we earn for some time now," Antlitz said, according to prepared remarks. "That doesn't go well in the long term! If we carry on like this, we won't succeed in the transformation."

Electric-car sales in Germany have plummeted this year, though the group's sales were stable on year in the second quarter, the group said.

"There are plants dedicated to EVs that aren't producing at the levels expected and costs are out of whack," Bernstein analyst Stephen Reitman said in a note.

Antlitz said the company has one year, maybe two, to turn things around. His speech came days after the company floated the possibility of two plant closures in Germany as a means to reach its 10 billion euro ($11.04 billion) savings goal for the VW brand.

Daniela Cavallo, chairwoman of the Wolfsburg Works Council, said she agreed with the need for change, but that investing in technology, streamlining production processes and stabilizing its supply chain--not cutting back its workforce--was key.

"I have made our expectations of the board of management clear: Closing locations, putting employees on the street, and watering down collective agreements--all of this is not a solution," Cavallo said in prepared remarks. "With this strategy, the Volkswagen patient will not get healthy."

Write to David Sachs at david.sachs@wsj.com

(END) Dow Jones Newswires

September 04, 2024 05:18 ET (09:18 GMT)

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