German Volkswagen said the negative winds in the car industry meant it could not ignore the closure of facilities in its home country and should abandon its long-standing commitment to job protection, which has been in place since 1994 and prohibits layoffs until 2029.
Volkswagen Group CEO Oliver Blume said on Monday that the European automotive industry is in a very difficult and serious situation.
New competitors entering the European markets expressed Germany's deteriorating position as a production center and the need to act decisively.
Thomas Schaefer, CEO of Volkswagen's Passenger Vehicles division, said efforts to reduce costs have yielded results, but counterwinds have strengthened significantly.
European automakers are facing increasing competition from cheap Chinese electric cars.
The company's semi-annual results show that it will not achieve its goal of saving €10 billion by 2026.
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The discussion about closures and layoffs is about the company's main Volkswagen brand.
Operating earnings of the main brand from €1.64 billion to €966 million (1.1 billion) in the previous year $) has fallen.
The group also includes SEAT and Skoda ⁇ , as well as luxury Audi and Porsche brands with higher profit margins than mass-market vehicles produced by Volkswagen.
The company has tried to cut costs through early retirement and acquisitions that prevent forced layoffs, but now says these measures may not be enough.
Additional measures affecting factories or job guarantees will be negotiated with workers' representatives.
The closure will be the first such event since VW ⁇ 's U.S. factory in Westmoreland, Pennsylvania, closed in 1988, according to the DPA news agency.
Union officials and workers' representatives attacked the idea of shutting down or laying off workers.
Thorsten Groeger, chief negotiator of the IG Metall industrial union VW ⁇ , said on the union's website that the management's approach is not only narrow-minded, but also dangerous, because it risks destroying the heart of Volkswagen ⁇ .
Daniela Cavallo, senior employee representative, ⁇ Management failed... The result is an attack on our employees, locations and employment contracts. He said no factory would close.
Stephan Weil, the governor of Germany's Lower Saxony region, who sits on the company's board of directors, agreed that the company should take action, but Volkswagen ⁇ i relied on alternative ways of reducing costs, urging it to avoid factory closures: ⁇ The state government will pay for this pay special attention to this ⁇ said dpa in a statement reported by the news agency.
