Volkswagen becomes a normal company and prepares to fire workers and close factories in Germany as well

“Germany is no longer competitive enough” – CDU leaderFriedrich Merz openly criticized the current German government industrial and economic politics. Triggering this criticism, voiced at a CDU event, was the announcement by automobile giant Volkswagen that it would implement drastic cost-cutting measures. To save money, management had considered layoffs and plant closures as possible options.

For Merz this is a wake-up call aimed at the “Ampel” “Semafor” coalition. The fact that the Volkswagen board has declared the group a “restructuring case” shows fundamental problems with economic policy. The political framework is responsible for the fact that entire sectors are no longer competitive. “This finally shows this federal government our position,” the CDU politician said, quoted by Spiegel. “This is not an economic issue of the world market.”

The destruction of the German auto sector is the consequence of the misguided national and European policies pursued by Socialists and Greens ruling in both insitutions, according to Mertz.

Let us now turn to see how serious the case of Volkswagen is

VW wants to end the era of the job secured for life

Background: VW had announced it would tighten the austerity measures it adopted long ago. For the first time, factory closures in Germany, a taboo position until yesterday, are no longer ruled out. In addition, as reported by the Reuters news agency, employment protection, which was supposed to last until 2029, will be abolished. This in turn makes layoffs from work fundamentally possible . On Monday (Sept. 2) the board presented a corresponding program to the Works Council.

VW, which had been the standard bearer of Germany’s system of workers’ union co-partnerships in company management, is on its way to becoming a company like any other. The unions are also being pushed aside in Germany, and just when the Social Democrats are in government.

Thomas Schäfer, a member of Volkswagen AG’s board of directors, said in early August at the presentation of the half-year report, “We need to further reduce our fixed costs to stay in line in the long run in this difficult situation.” market environment. The additional hurdle is clearly reflected in our key figures, especially for the Volkswagen brand: in the first half of the year, fixed costs increased and could not be offset by vehicle sales and revenues.”

Oliver Blume, CEO of the Volkswagen Group, is more optimistic: the Volkswagen Group achieved a “solid result” in the first half of the year. Performance programs are gaining momentum “at the group level.” “But there is still a lot of work to be done.”

Economists comment on Volkswagen – “A belated wake-up call.”

There has also been criticism from economists. “This shows once again what the long-term consequences are of years of economic stagnation and structural changes in a no-growth environment,” Carsten Brzeski, chief economist at ING told Reuters. “The automotive industry is not only symbolically important for Germany, it is also a key sector for the national economy.”

According to the economist, the signs are only increasing. Recent months have seen repeated bankruptcies — both of traditional companies and those that form the backbone of the German economy — and rising unemployment worries the ING expert. According to the Federal Employment Agency, the number of unemployed increased by 63,000 in August 2024 compared to July. Compared with the same month last year on paper there is an increase of 176,000.

“If such an industrial giant really tightens austerity measures and closes plants, it could be a long overdue wake-up call that current economic policy measures need to be significantly increased,” Brzeski explained.

If VW is in crisis, what other companies are safe in what was a world economic and industrial powerhouse?