Supervisory Board gives the green light to Volkswagen’s cost-cutting plan. Seat set to be phased out by 2029
A surprise unanimous approval, just when it seemed there was no longer any room for compromise. The Board of Directors was prepared to bypass the Board of Commissioners and appeal directly to the shareholders’ meeting. The restructuring plan involves cutting a further 50,000 jobs by 2030, in addition to those already underway, and the closure of four plants between 2031 and 2034. The trade union: an escalation has been averted; no decision has been made regarding the closures.
Key points
On the evening of Thursday 3 September, Volkswagen’s Supervisory Board approved the drastic restructuring plan presented by the CEO, Oliver Blume. The plan had been rejected at the July meeting due to opposition from the Lower Saxony state government and the trade unions to proposals for a further 50,000 redundancies by 2030 – in addition to the 50,000 redundancies already underway – and the closure of four plants in Germany. As regards the plants in Emden, Zwickau, Hanover and Neckarsulm, the group sees no competitive prospects beyond 20230 and expects operations to cease between 2031 and 2034.
The turning point
Under the previous cost-cutting plan – agreed following strikes and protests by the IG Metall trade union – the group is already seeking a buyer for the Osnabrück plant.
The unanimous approval came as a surprise during an extraordinary meeting of the Board, which was due to convene on 4 September. Until late on Thursday afternoon, it had seemed there was no scope for a compromise. According to Handelsblatt, however, the Executive Board was reportedly prepared to bypass the Supervisory Board and put the plan to a vote by shareholders at an extraordinary general meeting. This would have been a first in Germany.
In order to neutralise the co-management system that grants the Land a veto over strategic decisions (thanks to a 20 per cent stake), the Board of Directors is said to have threatened to spin off the main Volkswagen brand. The Government of Lower Saxony opposed such a dramatic change.
The group announced in a statement that it will streamline its portfolio and reduce its model range by around 50 per cent. Volkswagen intends to cut production capacity by around 500,000 vehicles in Europe to avert losses of €1.5 billion a year, according to Chief Financial Officer Arno Antlitz. The decision gives Blume a stronger mandate to press ahead with his ‘Plan for the Future’.
