- Title: Volkswagen to cut 30,000 jobs at VW brand by 2020
- Date: 18th November 2016
- Summary: WOLFSBURG, GERMANY (FILE - MARCH 2016) (REUTERS) VARIOUS OF VOLKSWAGEN PLANT VARIOUS OF CARS ARRIVING AT VW PLANT TRAFFIC LIGHT SWITCHING TO RED WOLFSBURG, GERMANY (FILE - OCTOBER 2015) (REUTERS) VW LOGO VARIOUS OF VW PRODUCTION
- Embargoed: 3rd December 2016 09:43
- Keywords: Volkswagen emissions Germany job cuts
- Location: WOLFSBURG, GERMANY
- City: WOLFSBURG, GERMANY
- Country: Reunion
- Reuters ID: LVA00258Z164N
- Aspect Ratio: 16:9
- Story Text: Volkswagen and its powerful labour unions announced on Friday (November 18) an agreement to cut 30,000 jobs at the core VW brand in exchange for avoiding forced redundancies in Germany until 2025, a compromise which leaves the carmaker's profitability still lagging rivals.
The turnaround plan will lead to 3.7 billion euros ($3.9 billion) in annual efficiency gains and lift the VW brand's operating margin to 4 percent by 2020, from an expected 2 percent this year.
That target still remains below rival European carmakers such as Renault and Peugeot Citroen, which are targeting an operating margin of 6 percent in 2021.
"This agreement will be on the cusp of change. That is urgently necessary, because in the coming years our industry will significantly change, more than ever before," Volkswagen's brand chief executive Herbert Diess said.
Europe's largest automaker is trying to increase savings at its biggest business in its home base of Germany, where its costs are high.
It must also find billions of euros to pay fines and settlements stemming from its diesel emissions cheating scandal as well as fund a strategic shift towards electric and self-drive cars.
"We are all aware that now is when the actual work starts. The way to implement those programmes is not going to be easy, but we embark on this way together," Volkswagen chief executive Matthias Mueller said.
Volkswagen's labour leaders said management had agreed to avoid forced redundancies in Germany until 2025 a step which clears the path to cutting 23,000 jobs via buyouts, early retirements and by reducing part-time staff.
Jobs will also be cut in North America, Brazil and Argentina, VW said, without being more specific. Around 114,000 employees work for VW brand in Germany.
Labour leaders agreed to the cuts in exchange for a management pledge to create new 9,000 new jobs in the area of electric cars, mainly at factories in Germany.
Analysts and investors nonetheless welcomed the deal, sending the share more than 2 percent higher to the top of the blue-chip index in early Frankfurt trading.
Volkswagen will build electric cars at its factories in Zwickau and Wolfsburg.
Electric motors will be built in Kassel, and VW will start battery cell production and development in Salzgitter.
Volkswagen will also build battery packs for electric and hybrid cars at its plant in Braunschweig, the company said. - Copyright Holder: FILE REUTERS (CAN SELL)
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