Volkswagen To Cut 30,000 Jobs, 5% Of Workforce

Tyler Durden's picture

Following a tumultuous year of declining sales as a result of its emissions-cheating scandal, today Volkswagen agreed to cut 30,000 jobs at the core VW, roughly 5% of its global salesforce of 624,000. After months of intense talks, labor and management agreed on a package to balance cost-cutting with investment as the auto industry shifts away from traditional combustion engines and adapts to car-sharing services and self-driving technologies.

The job cuts will come through attrition in the form of early retirement and not replacing workers that leave; the company vowed to refrain from forced layoffs until 2025. The savings comprise 3 billion euros at its German factories and another 700 million euros abroad. Argentina and Brazil will be hit hardest by the staff reduction outside Germany, with Volkswagen’s personnel chief Karlheinz Blessing describing the Brazil cuts as “brutal.”

“This is a big step forward, maybe the biggest in the company’s history,” VW brand chief Herbert Diess said at a press conference in Wolfsburg. “All manufacturers must rebuild themselves because of the imminent changes for the industry. We need to brace for the storm.”

The deal is expected to result in €3.7 billion in expense reductions as the company tries to streamline operations and cut costs. However the compromise leaves the carmaker's profitability still lagging rivals: the plan is expected to lift the VW brand's operating margin to 4% by 2020, from 2% this year, but still below rival European carmakers such as Renault and Peugeot Citroen which are targeting an operating margin of 6 percent in 2021.

Volkswagen, Europe's largest automaker is trying to increase savings at its biggest business in its home base of Germany, where its costs are high. Reuters notes that VOW must also find billions of euros to pay fines and settlements stemming from its diesel emissions cheating scandal as well as fund a strategic shift toward electric and self-drive cars. Volkswagen's labor leaders said management had agreed to avoid forced redundancies in Germany until 2025 a step which clears the path to cutting 23,000 jobs via buyouts, early retirements and by reducing part-time staff.

Jobs will also be cut in North America, Brazil and Argentina, VW said. Around 114,000 employees work for VW brand in Germany.

Labor leaders agreed to the cuts in exchange for a management pledge to create new 9,000 new jobs in the area of electric cars, mainly at factories in Germany. As all mass layoff announcements, this one too was initially cheered by markets, which sent the company's shares more than 2% higher to the top of the blue-chip DAX index in early Frankfurt trading, and reducing the drop since the scandal broke in September 2015 to 27 percent. However, later in the day, the gain was all but wiped out. 

Hedge fund TCI, which has been critical of Volkswagen management, said it looked like a good deal all round provided it could be made to stick.

"As long as they are net savings – the savings are not given back by increased costs elsewhere in the organization," said TCI partner Ben Walker. "They’ve just to deliver now. It’s easy to talk. They now have to delivery and execute," he added.

Labour leaders were also pleased with the outcome. "The most important message is the jobs of the core workforce is secure," Volkswagen's powerful works council chief Bernd Osterloh said at a news conference in Wolfsburg. "We have agreed that forced redundancies are ruled out until end 2025. When I see what is going on at other companies, this is a big success in difficult times," Osterloh said.

There was also some bad news for Tesla. In a concession to workers, Bloomberg notes that the manufacturer agreed to build two electric cars at German sites, one in Wolfsburg and one in Zwickau. The company will add as many as 9,000 positions for future-oriented projects such as electric vehicles and digital features. The state of Lower Saxony, where Volkswagen is based, will become a technology hub for the manufacturer, and many of the 1,000 jobs to be created there will be for software engineers and cloud-technology experts. Electric motors will be built in Kassel, and VW will start battery cell production and development in Salzgitter. Volkswagen will also build battery packs for electric and hybrid cars at its plant in Braunschweig, the company said.

 

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
jcaz's picture

"Salesforce"?  Umm, they work on commission, right?

Good plan.

CuttingEdge's picture

So I'm guessing VW HQ isn't a place to send your CV if you're one of the 1.4 mill young males from exotic distant lands Merkel has let in?

Déjà view's picture

Fahrvergnügen mit Schadenfreude? Potato soup coming up...

Holy hand grenade of Antioch's picture

Is that what it means?

 

& here I always thought it was what the Green Bay Packers did when they ushered in the Aaron Rodgers era.

Déjà view's picture

Gute 'Fart' actually comes before Fahrvergnügen...

Paul Kersey's picture

There are more shoes to drop.  Audi is next, and who knows how much the fix will cost.  Talked to one TDI owner, and VW is offering him far more than the Blue Book price for his used (well used) car.  He's hoping to use the money to buy a new, fixed TDI at a severe discount.  It won't get the same low MPG or have as much torque, but it will be a new car.  He lives in a county that doesn't do EPA inspections, and hopes to be able to dismantle the fixes so that his car will be like it was before they "fixed" it.  I'm thinking that there will be some kind of national data base, and that he won't be able to get away with it. 

Déjà view's picture

Owner 'Fixes' void warranty...

duo's picture

This. With the penalty my wife will get $2K less for her 2013 Jetta Sportwagon than she paid for it new. Such a waste of energy and natural resources to destroy such a car. Plus, it gets 40 MPG in town the way I drive.

847328_3527's picture

"Robust!"

 

~ Soweto Obama

Dubaibanker's picture

Only 30k, what about the rest?

All companies in the entire world are firing....worse than doomsday!

NoDebt's picture

Automation.  Vee Dub has it's own problems but the real driver in manufacturing is automation.

 

847328_3527's picture

"We Fahrfignutooned some folks."

Sandmann's picture

VW is overmanned. It lives off Porsche and Audi margins. Its Skoda sub in CZ generates much more value-added than VW using VW floorpans in CZ factories. VW should be shedding 30,000 a year and closing production in Wolfsburg. It has SEAT in Spain and Skoda in CZ and should outsource most of its German production of small and midsize cars. VW is overrated technically and overpriced because of feather-bedded unions and rampant corruption.

There is nothing special about German cars - Audi engines are made in Hungary, Skoda using Audi running gear, Cayenne/Touraeg/Q7 are made in Slovakia. It is another GM

Arnold's picture

All the chip programmers' fault.

Find that work around man and Kafka him.

Sandmann's picture

Bosch - they know who they are - filed in court in San Fran

AVmaster's picture

"There is nothing special about German cars"

 

Yea there is: See that big round circle with a V and a W?

Oh, and they're over engineered pieces of shit.

I used to be a mechanic for a used car place that would take in VW's...

I had two sets of tools: One set for VW's, and another set for everything else...

I hate working on the fuckers and won't even touch 'em now...

NoDebt's picture

"I had two sets of tools: One set for VW's, and another set for everything else..."

As an amateur mechanic I can attest to the truth of that.  

new game's picture

i drive the auctions and as a matter of fact at 8 years and 150k, engine good, with xmas tree dash. most likely mass air flow, and/or oxy sens. resale shit. nobody wants these peicer cept the 18 yr old moder. plenty of aftermarket money pit shit goen on though. the appeal is long gone as reality of brand faces market that has  wallet fatigue. lol, to those german fuks that think thye have a superior vehicle. lol again on loss of money honey, and for what? tarnished brand...

new game's picture

stay with my honda or toyota. thanks anyways...

JRobby's picture

Yes, the special tool kings VW/Audi/Porche.

They were great 40 years ago like most things.

How about an MB that throws a suspension fault code with 12 miles on the clock? 12! "We love all the gadgets! Addicted to them!"

BabaLooey's picture

"The People's Car"

Nope.

JRobby's picture

Shhhhh! Too many secrets out of the bag!

The problems go back decades like GM's did.

The emissions rigging hit was like kicking a fat old drunk over that was weaving down the sidewalk. 

Fireman's picture

Essentially follow the USSAN outsourcing suicide solution used by Mercan greedsters that has turned USSA into a collapsing heroin infested sewer.

Can't see Germans going that route.

Sandmann's picture

Those wonderful plans for electric cells and electric cars are funded with German Government "research" money

niemand's picture

perfect news for german voters. thanks former Stasi Agent IM ERIKA ( FerkelMerkel )!

nothing funnier than watchin´ disintegrating self declared elites.

german voters are highly sensitive to job cuts, especially in the car manufacturer industry.

AFD 2017 almost certain. FUCK the EU.

NoDebt's picture

One of the guys in my office got his offer from VW to turn in his "cheating" diesel VW.  $14K to turn it in.  If he wants to keep it they cut him a check for $5K.  I told him to keep it and drive the wheels off it.

 

JRobby's picture

Smoke up Johnny!

We are all doomed anyway! 

Déjà view's picture

Hang on to it...who knows...it might meet future specs. 

847328_3527's picture

They can all come to American where Obama has been creating shovel-ready jobs for 8 years...

 

..I mean Barrista jobs.....

THE DORK OF CORK's picture

If you observe the IEAs global energy flow charts from the early 70s until today you will witness something quite amazing.

Road transport eating a larger and larger share of the oil pie

From approx a quarter of total oil to today where half ~ of total oil.is consumed in road transport.

This is a direct consequence of the bank pushing prices higher then income.

More and more energy gets consumed in distribution inputs rather then production / consumption.

On the more extreme usury jurisdictions / plantations such as Ireland almost all of the highest quality energy is consumed on the road or aviation sector forcing the population to consume " green" high cost energy provision to sustain their more basic needs.

 

Stu Elsample's picture

In 20 years the only vehicles in Germany-istan will be mule pulled carts...and women will not be allowed to operate them.

just the tip's picture

the word you are looking for is Germastan.

Chauncey Gardener's picture

Sounds like a new disinfectant...

I am Jobe's picture

Next up Dell, HPE all will cut the same amount or more as sales slump. 

Cluster_Frak's picture

facist car made for facists. I am surprised they are not ramping up production. Merkel says there are a lot of anti mulsim invader facists in Europe. The sales should have spiked long ago with that's true. Or are they patriots? Hard to distinguish with all those 'hate' speech laws.

Secret Weapon's picture

I wonder if German car covers drop all the way to the ground, come in black only and have slits cut out for the headlights?

THE DORK OF CORK's picture

Major weakness in European çar sales this October.

With declines of car sales especially in the core (Netherlands,  Germany,  France)

Signs of the Irish car market beginning to roll over but not before totally destroying the remains of the real local economy and society.

The consumer war economy sucks 

calal's picture

yesterday i ve just cleaned the gasoline pump on my 24y old vw golf thanks to the mixed ethanol gasoline crap.shes running now like she always have that good old lady.

as a european consumer, i fear for vw. it seems to me that this company has been tagged for death by the us .All that greenwashing crap is just a new mean to destroy competition before going into that market.

Kefeer's picture

ZH - Here is a story that you seem to have missed and part of the post-election fall out.  this guy is blaming his wife with a dab of Trump - good riddence Mr. Clapper.


US intelligence chief Clapper resigns
Paul Morphy's picture

Any cuts at Volkswagen Bank, you know their finance bank division? Or are all cuts going to be on the production/sales sides of the VW group?

THE DORK OF CORK's picture

It's a symbiotic relationship.

One cannot survive without the other.

From 2013 car sales began to expand in Ireland again 

It mirror's the rise of new 1 to 5 year credit witnessed in Ireland.

Typically these loans are of 3 years duration.

People can no longer afford the final bubble payment.

These secondhand cars now come on the markert en masse 

 

PS

General Motors practically invented consumer credit in the 20s

Paul Morphy's picture

For a change try telling us something that we don't know. For a change. You might actually add something that would be worth reading.

 

Some of us live in Ireland.

 

 

THE DORK OF CORK's picture

I am on record stating   Irish consumer credit of the 1 to 5 year duration began expanding rapidly in Ireland post 2013.

This is very clearly seen in the Irish central bank reports " money and credit"

I said this before anyone else that I can recall.

You certainly will not hear this on the corporatist mouthpiece " The Irish economy" blog,  at least until it's too late.

 

In their favour,  the income price differential is so big in Ireland that it makes a gut understanding of the rightness of social credit philosophy a given.

 

http://www.socred.org/index.php/blogs/view/the-puzzle

 

Unfortunately people remain ignorant despite the in their face extraction. 

This is inexplicable.

Paul Morphy's picture

You're busy selling yesterdays news on this site, as if this news was your own. You used to do the same thing at nakedcapitalism.com.

It's beyond tedious.

For once tell us something that we don't already know.

THE DORK OF CORK's picture

Ha. 

I was busted out of naked capitalism for eventually advocating social credit as a solution

 

A large bunch of misfits was dumped from that blog over the years.

Typically the spectrum encompasses greenbacks all the way up to distributionists.

Yves Smith is a New York banker with connections to the dark side

It's a typical leftist nuanced propaganda site.

PS 

I do not sell anything.

I am a one man non commercial entity 

I have my soapbox and thats about it.

 

 

Sandmann's picture

VW Bank should join DB - €100bn in Auto Loans

THE DORK OF CORK's picture

Almost all of the consumer growth witnessed in Ireland post "bailout" has been directed into the car / credit nexus or as a result of increased population / migration.

Per capita consumption on domestic human consumption continues to decline year after year.

The rationing required to sustain the consumer war economy car fleet is now extreme beyond all of our previous imagining.

Ireland is the model.

Traffic jams / fuel waste combined with empty highstreets in the old sometimes medieval centers of our towns and provincial cities.

 

. This dynamic of "development" has been obvious since at least the suez crisis of 1956.

Fireman's picture

From the horse's mouth how Irish banksters and political filth screwed the Irish tax payer contributing to the ongoing "dynmaic of development".

 

 

https://www.youtube.com/watch?v=F-EvFQvoAt4&feature=youtu.be&app=desktop