“Earthquake at Volkswagen,” ran the headline in the Wolfsburger Nachrichten, the newspaper of the northern German city that has become synonymous with the carmaker. The report said that Volkswagen, shaken by the crisis and seeking to save some 10 billion euros, was considering for the first time in its history closing factories in Germany, as well as the premature dissolution of a 30-year job protection agreement. force.
News that was leaked this week at the automaker’s main plant in Wolfsburg, as confirmed by a reporter waiting outside Gate 17 as the last shift workers left. Even if they hadn’t discovered it before, the news didn’t come as a surprise to the workers either. “Tempers have been in the doldrums for a long time,” said one. Another spoke of an “unusually high sickness rate” among the workers, underscored by the feeling that something terrible is threatening the company and in a climate of uncertainty that has recently manifested itself in the cancellation of shifts. “We knew something was coming,” said a third.
Last Wednesday, company executives and some 15,000 workers experienced a tense standoff at the Wolfsburg plant. Some 10,000 workers gathered in a huge hall in Pavilion 11, while another 5,000 watched the clash on screens set up outside.
“We are Volkswagen, you are not,” declared the workers’ banners, which together unleashed their collective anger. With the media barred from the room, eyewitnesses described a 20-minute period during which the workers chanted and whistled, preventing the bosses, imperturbable and slightly embarrassed behind a long table, from speaking. In white jackets and white shirts with open collars, their summer tans seemed to have faded in the tense atmosphere of bright lights.
“We are missing about 500,000 car sales per year,” said Arno Antlitz, Volkswagen’s chief financial officer. The number is equivalent to the output of two factories. “It has nothing to do with our product or poor performance; there is simply no market left,” he said. Also, that the company had “a year or two” to turn things around. According to experts, Volkswagen (VW) still has about 20,000 employees.
Oliver Blume, CEO of the Volkswagen Group, sounded like a father addressing his family when he told his employees in no uncertain terms that the company had been living beyond its means for about 15 years, withdrawing some €1.5 billion from the Treasury. euros per year, and that things needed to change. A “family piggy bank,” he said, that “remained empty at the end of the month.” Sometimes a kind relative helps pay for extra things like a new television, Blume continued with the family comparison, before pointing out bluntly that this role was played by sales in China, which for years helped to support the company financially.
Having grown up in the region, Blume understands perfectly how VW supports the economy of the state of Lower Saxony and, by extension, its identity. At one point, he seemed to drop the mask of professionalism and show his own emotions when he spoke of his desire to “protect the VW family.”
“We are the VW family, and a family leaves no one behind,” responded Daniela Cavallo, chairwoman of the works council and representative of the 120,000 people the carmaker employs in Germany. The response foreshadows the emotional nature that will likely mark the battle about to begin. Cavallo also promised “fierce resistance” to the austerity imposed by the company. “We will not let ourselves be liquidated,” he said. Although they are rare in the company’s history, strikes cannot be ruled out.
Founded under the Nazi government with the ambition of making an affordable “people’s car” (in the Volkswagen sense), the challenge for the 87-year-old company is not just Wolfsburg or the state of Lower Saxony. The carmaker is also deeply rooted at six other sites in Germany, from Emden to Zwickau. According to Cavallo, “a crisis at VW is a crisis for Germany.”
Scandal of dieselgate
The last major setback VW faced was the scandal over the dieselgate 2015-2016, when it was discovered that it had falsified emissions tests on its vehicles in an attempt to make them appear more climate-friendly than they actually were. The scandal cost it some €30 billion in compensation worldwide, in addition to the inestimable damage to its reputation as a symbol of German reliability and technical prowess.
The loss of tax revenue for local authorities caused by the dieselgate It is an example of VW’s influence in Germany and what a reduction in its industrial power could mean. “Our factories are the engine of entire regions,” Cavallo said. The representative gave examples of the negative effects that millions of people have felt in their daily lives as a result of the loss of local taxes caused by the diesel portal. ToIt has had a profound impact on municipal coffers, he said, causing street lights to go out in one town; causing burial costs to skyrocket in another; and even forcing one town to “stop its pest control services.”
In the Bundestag, opposition parties seized on the VW crisis last week as a symbol of deeper and more widespread problems in the German economy. “If VW coughs, Germany will catch the flu,” said Gitta Connemann, a prominent member of the opposition and the pro-business wing of the CDU, stressing the possible repercussions the crisis could have on the entire economy and demanding that Olaf Scholz step in from the government.
“Germany’s most important sector remains the automobile industry; and in this sector, VW is the alpha male,” Carsten Brzeski, chief economist at Dutch global financial institution ING, told German media. “When the giant falters, everything falters,” he also said, adding that Volkswagen was more important to Germany, Europe’s economic powerhouse, “than any foreign trade with Greece.”
Some blame the German government for the company’s plight. They say its green agenda has caused a collapse in car sales in the country and a rise in energy prices. They also lament that the government has reneged on its promise to cut red tape and eliminate incentives for buying electric vehicles, after abruptly ending a subsidy program late last year.
But there is also a lot of internal criticism of VW itself. Above all, it has failed for years to take advantage of the opportunities offered by electric or hybrid cars. Why has VW, unlike its Chinese competitors, taken so long to produce a basic and affordable model for the general public comparable to its great success, the so-called “Beetle”? This is just one of the many “management errors” detected by Cavallo. According to him, the company has long since lost its popularity. As one analyst put it last week: “It’s as if the “Volk” had disappeared from Volkswagen.”
But the truth is that Europe is making 2.5 million fewer cars than it did five years ago. The electric car market was down 69% year-on-year in August, likely due to a loss of consumer confidence, and one in five electric vehicles sold in Europe is Chinese-made. VW’s affordable electric car is in the works and will go on sale in 2025, but it will not be made in Germany but in Spain.
According to Helena Wisbert from the Automotive Research Center in Duisburg, “there are fewer and fewer arguments that justify manufacturing in Germany from a purely economic point of view.”
Gianna Leo represents the young members of the prestigious VW apprenticeship program, which has long been the envy of other companies and nations, within the GJAV organization. At the meeting in Hall 11 in Wolfsburg, Leo expressed her concern on Wednesday about the lack of Future security (“future security” or responsibility to new generations). The company is recruiting new recruits who are disoriented, he explained, because of the prospect of the 1,000 training places guaranteed by VW each year being cut.
“I don’t recognize this company anymore,” Leo said. “This is not the same VW where I started my professional life.” The workers received his words with cheers and a standing ovation. For the managers, a new wave of boos and whistles.
