Volkswagen's labor chief warns of massive layoffs, factory closures in Germany

LONDON (Reuters) – Volkswagen plans to close at least three factories in Germany, lay off hundreds of thousands of workers and shrink its remaining plants in Europe's biggest economy as it plans a deeper-than-expected overhaul, the head of the carmaker's works council said on Monday.

Here are some reactions to the news:

Thomas Schaeffer, CEO of the Volkswagen brand:

“We are currently not making enough money with our cars. At the same time, our costs for energy, materials and personnel have continued to increase. This calculation cannot work in the long term.

“So we have to get to the root of the problem: We are not productive enough at our German sites and our factory costs are currently 25-50% higher than we planned. This means that individual German plants are twice as expensive as in Germany. Competition

“Furthermore, we at Volkswagen still process many tasks internally that the competition has already outsourced more cost-effectively. This means that we cannot continue as before. We need to quickly find a joint and sustainable solution for the future of our company.”

German government spokesperson:

“It is well known that Volkswagen is in a difficult situation. (…) The chancellor's position on this matter is clear, that is, past possible mismanagement decisions should not be made at the expense of employees. It is now a matter of protecting and securing jobs.”

Stifel analyst Daniel Schwarz:

“Plans have exceeded market expectations. I believe this reflects a unique combination of adverse factors: competition in China, softening demand in Europe, particularly BEVs (battery electric vehicles), tighter regulation.

“Of course, the unions will not agree with the proposed action. However, I find it encouraging that the unions seem to largely agree with the analysis that VW needs to take significant action.

“I think a strike is likely: one side asks for a 7% wage increase, the other side offers a 10%> wage cut and factory closures.

“Finding a compromise will not be easy. It will be interesting to see whether the unions will limit the strike to VW brand factories (where it could hurt VW less) or extend it to other brands like Porsche, where the damage will be more significant.”

(Reporting by Reuters; Compiling by Josephine Mason and Christoph Steitz; Editing by Susan Fenton)