By William Wilkes and Sasha Draeger-Mazer
Volkswagen AG Chief Executive Officer Oliver Blume will confront workers on Tuesday over his plans to radically shrink the carmaker, a test of his ability to push through sweeping changes at speed.
Blume and VW brand chief Thomas Schäfer are due to present their restructuring plan, which could wipe out as many as 100,000 jobs, at the company’s main Wolfsburg factory. It’s the first of a series of townhall gatherings across Germany in the coming days.
Tensions have been running high even before the initial meeting. IG Metall chief Christiane Benner has branded the CEO’s push to slash costs and lift margins to 9% as “cloud cuckoo land.” A local unionist on Monday warned that the group is willing to consider strikes if Blume doesn’t walk back his plans.
But the 58-year-old manager has made the overhaul the defining test of his tenure. He wants to reduce costs and remake Volkswagen for an industry upended by electric mobility, software and fast-moving rivals from China. The automaker’s special governance means he cannot simply order the cuts, but needs to bring powerful labor leaders and the state of Lower Saxony, which can veto some major decisions, along with him.
“There are many enemies, many veto players and little support,” said Wolfgang Schroeder, a political science professor at Kassel University who has studied German labor relations and Volkswagen.
Pressure is also coming from above. Porsche SE, the holding company of the billionaire Porsche-Piëch family that controls Volkswagen, has urged management to move faster, warning that VW is at a “historic crossroads.” The clan has its own reason for urgency: waning profits at Volkswagen and sports-car maker Porsche AG are minimizing the dividends it’s long relied on.
Volkswagen’s earnings have been battered by declining sales in China, high expenses in Germany and underused factories. That’s leaving the company with a roughly 30% cost disadvantage to some rivals and at least €10 billion of overhead to strip out.
Management is working on plans to cut another 500,000 vehicles from annual European production capacity, thin managerial ranks and slash the number of models and equipment variants.
This week, Blume is taking his argument directly to the factory floor: while he and Schäfer appear in Wolfsburg, senior executives including Chief Financial Officer Arno Antlitz will fan out across Volkswagen’s German plants to argue that deeper cuts are unavoidable.
Workers have already agreed to tens of thousands of job reductions, only to be told more is needed. Labor leaders say employees are being asked to pay for years of strategic mistakes on software, EVs and China. Management needs to deliver future job perspectives for workers at all German plants, the company’s top labor official Daniela Cavallo said late Monday in Hanover.
Blume rose to the top in part because he was seen as a conciliator capable of navigating Volkswagen’s rival power centers. His future may now depend on whether he can persuade them to accept decisions they have vowed to resist.
The CEO faces a “mammoth task,” said Ingo Speich, head of sustainability and corporate governance at Deka Investment.