The short answer, it would seem so, the fact that they are contemplating its first German factory closure in its 87-year history risking a potentially damaging fight with the Unions should give us a clue to the extent of their woes as they try to keep their heads above water.
For the somewhat conservative auto-manufacturer this closure would seem to be unthinkable. They are (in-part) governed by a strong works committee that had an agreement with the company that jobs would be safe until 2029 at least. So the very thought of job loses before that date could set them on the path of confrontation with the Union.
Volkswagen are struggling with the complexities of transitioning to the government-imposed EV future in markets where the public are at best apathetic to driving EVs. There is a need in Wolfsburg to cut some 10 billion Euros of costs which will entail about a 20% reduction in personnel numbers, all of which were supposed to be administrative.
A recent report in the Economist claimed that sales for VW’s EVs are between 30% and 70% behind expectations, depending on the marque and then there is the problem with their software. In China where EVs seem to rule, they account for just about 2% of the market.
Which is a sad reflection on the company that really opened up the market and taught so very much of their expertise to the many fledgling companies there.
The company is now contemplating the idea of shuttering at least a factory in Germany and perhaps moving some other jobs to lower cost centres to achieve their aim of lowering costs. This will of course mean that they will have to negotiate their way out of the deal with the union that protected jobs until 2029.
To avoid all out war with the workforce they have offered early retirement packages to older sections of the workforce whilst freezing new hiring and blocking pay rises for the foreseeable future.
In addition to this, workers have been offered a 50,000 Euro bonus to accept a voluntary severance package. All this means that some workers could be paid as much as 450,000 Euros to go and sit in their gardens.
Volkswagen employs about 300,000 workers in Germany and about another 350,000 elsewhere in the world. One of their strengths has always been the cooperation between management and the workforce.
This has seen about 20% of their board of directors being elected by the workforce which has ensured that the car making giant has not suffered crippling strikes of the like that marred the automakers of France and the UK and to some extent the USA.
Now with the onslaught of subsidised cars from China we could be seeing the end of the cozy boardroom relationship as VW strive to move their manufacturing base away from expensive Germany and into countries where the cost of a mans labour is far lower.
