Current situation is severe! Volkswagen CEO calls on workers to reduce labor costs to "ensure the future"

On Wednesday Eastern Time, Oliver Blume, CEO of the German automotive giant Volkswagen, addressed employees at the company's headquarters, emphasizing that the company is facing a sharp decline in demand in the automotive industry and increasing competitive pressure. He pointed out that in this context, ensuring the company's future survival and development has become urgent.

According to The Wall Street Journal, the CEO stated in his speech that Volkswagen has improved efficiency through streamlining operations, integrating resources, and business processes, achieving new synergies. However, he also admitted that despite these efforts, the future of Volkswagen remains uncertain, thus reducing labor costs has become particularly important. He said:

"The current situation is very severe. New competitors are entering the market with unprecedented force, and there is immense price pressure. Additionally, our labor costs in Germany have become too high, so urgent measures need to be taken to ensure Volkswagen's future."

On Thursday morning, Volkswagen ADR rose nearly 1.2% in early trading, poised for a three-day winning streak, but by the close on Wednesday, Volkswagen's stock price had fallen nearly 31.7% this year, approaching the lowest level set in 2010.

Union Leaders Call for Avoiding Layoffs and Factory Closures

According to Bloomberg, Daniela Cavallo, chair of the Volkswagen Works Council and a member of the company's supervisory board, stated at the end of October that the company is considering closing three factories and laying off thousands of employees, while planning to cut wages and working hours by 10%. She made it clear that the union hopes to avoid factory closures and mass layoffs and calls on the company to seek other solutions.

On Wednesday, after the Volkswagen CEO's speech, Cavallo told employees:

"We hope to resolve the issues before Christmas."

Analysts pointed out that restructuring a few weeks before Christmas would be a public relations "nightmare" and could provoke negative public reactions. Therefore, these layoff and restructuring plans may be delayed, with implementation expected at the beginning of the new year.

Employee Strikes in Response to Threats

Volkswagen's difficulties have intensified since this fall, with "bad news" continuously emerging. On September 3, due to worsening economic difficulties, the company considered closing its German factories for the first time; on September 10, tensions arose between Volkswagen and the union, announcing the cancellation of job security that had lasted for thirty years; on September 23, it was reported that Volkswagen might lay off up to 30,000 employees; on September 27, Volkswagen again lowered its profit expectations due to a continued decline in automotive demand; on October 28, the head of the Volkswagen union warned that due to the automotive industry crisis, three factories would close, and thousands would face layoffs.

Earlier this week, about 100,000 Volkswagen employees held a large-scale strike, accounting for about 33% of the company's German workforce. These workers protested in nine factories in response to the threats of mass layoffs and factory closures