Germany, Volkswagen myth crumbles: factories at risk of closure

AUTOMOTIVE The company never closed its facilities in Germany. Unions on the warpath

Volkswagen myth crumbles. Factories at risk of shutdown.

Today the company announces sacrifices to its 110 thousand workers

GIANLUCA ZAPPONINI

••• In Wolfsburg, the headquarters of Volkswagen, people are worried, according to insiders. Today, according to CNBC, the carmaker’s management will present its plans to around 18,000 employees during a municipal assembly, while rumours are circulating that the carmaker may end up closing its factories in Osnabruck, Lower Saxony, and Dresden, Saxony. Tensions are high at the company’s headquarters after data from the electricity market confirmed the substantial failure of the German green mobility project. And yesterday the stock market also gave its verdict: the shares of the leading European carmaker, among the world’s leading, closed the Frankfurt session down 1.4%. Of course, it could have been worse, but the signal is all there. Investors want to see if and how the German company will manage to get out of the electric car quicksand, where the challenge with China is now definitively lost. And above all, the question is whether Volkswagen will really continue on the electric path or, rather, return to the endothermic path. And to think that in the middle of the morning the stock was moving in positive territory. Then, the fall. More generally, it is confirmed once again that the entire European automotive sector is suffering, with production falling 22% compared to 2019, which highlights a deep crisis that is undermining the competitiveness of the entire sector. The automotive sector has been particularly affected by the contraction of the electric car market in Europe. A crisis aggravated precisely by the recent moves of major car manufacturers such as Volkswagen, which is considering, for the first time in its history, closing factories in Germany and suspending the “job guarantee” for around 110,000 workers. An austerity plan, announced by CEO Oliver Blume, which aims to deeply reduce costs and which could cause significant disruptions among workers. And the markets do not like this, not least because just around the corner there is an unprecedented confrontation with the very powerful German unions. And while the group that created the Beetle is expected to reduce costs by cutting ten billion euros in expenses by 2026, yesterday Belgian unions sounded the alarm about the possibility of a shutdown at the Audi factory – the same group – in Brussels. A grim picture of the stagnation that has engulfed Europe’s industrial “locomotive”, which more than other EU countries is paying the repercussions of the ongoing conflict in Ukraine and the reduction in trade with Russia, starting with the energy sector.