Germany: Volkswagen considering plant closures and job cuts
German automobile giant Volkswagen said on Monday that it could not rule out factory closures and redundancies as it looks to cut back a reported €4 billion more than originally planned in a sweeping savings plan.
The board said that the current strategy of offering reduced contracts and severance packages to employees nearing retirement was no longer sufficient to meet the company's targets, and announced it was terminating a job security program which has been in place since 1994.
"The European automobile industry currently finds itself in a challenging and serious position," said Volkswagen chief executive Oliver Blume.
"The economic environment has worsened and new competitors are pushing towards Europe. Germany is falling behind as a competitive location. As a company, we have to act."
Internally, Volkswagen's eponymous brand has fallen behind subsidiary brands Skoda, Seat and Audi. A range of cuts announced in 2023 was supposed to turn things around by saving around €10 billion by 2026, as Volkswagen attempts to streamline spending to survive the transition to electric cars.
But German finance newspaper Handelsblatt now reports that an additional €4 billion in savings also need to be found.
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