Volkswagen is one of those brands that is so well known and, you tend to imagine, so perennially successful that you’d think that once you go a foot in the door you’d be able to stay put right through until retirement. But in fact, it seems some of the company’s employees might soon be looking for other work as VW tries to save itself from oblivion.
Managers have reportedly told staff to expect redundancies as part of the automaker’s strategy to save €10 billion ($10.94 bn) and get itself back to full health in a rapidly changing automotive landscape where it’s having to face increasingly aggressive rivals and changing customer tastes.
The German automaker isn’t having an easy time right now. It’s losing market share in China, trying to avoid engaging in a price war with Tesla, and was forced to pause production of its EVs in Europe in response to sluggish demand for electric cars. Thomas Schaefer, CEO of the VW brand (as opposed to the VW Group) didn’t mince words at a recent staff meeting telling attendees that the company was “uncompetitive” in its current state as a result of high costs and inefficiencies within the organization.
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“With many of our pre-existing structures, processes and high costs, we are no longer competitive as the Volkswagen brand,” Schaefer told a staff meeting at the Wolfsburg HQ, according to information seen by Reuters. Gunnar Kilian, a board member for human resources, stated at the same meeting that reductions in the headcount would be possible by some employees agreeing to partial or early retirement. But he also explained that the majority of the €10 billion VW wants to save won’t be clawed back through job cuts, but through other measures that will be outlined later this year.
“We need to finally be brave and honest enough to throw things overboard that are being duplicated within the company or are simply ballast we don’t need for good results,” Kilian said, according to Reuters.
None of this has come out of the blue. VW has been aware of mounting problems for some time, and in June of this year Schaefer told VW managers that “the roof is on fire,” warning them that “we are letting the costs run too high in many areas.”