Plan would double job cuts to 100,000, halve model lineup
Volkswagen Chief Executive Oliver Blume brought a cost-cutting plan to the company’s supervisory board this summer that envisioned doubling job losses to 100,000, anticipating it would be rejected, according to a Wall Street Journal report.
If board factions cannot reach agreement at Friday’s meeting, Blume could take the unusual step of bypassing the board and presenting the plan directly to shareholders—an option that has no precedent at Volkswagen or in Germany’s broader stakeholder-capitalism tradition, where decisions have historically required consensus among workers, regulators, and shareholders.
The plan would also halve the roughly 150 vehicle models Volkswagen produces under brands including Audi and Porsche, cut overhead, and trim a portfolio of about 2,000 investments that includes stakes in four German soccer clubs. “Tariffs, new competitors and geopolitical risks: The entire automotive industry is under enormous pressure,” Blume told employees last week.
In July, ten board members linked to Volkswagen’s unions voted against the plan, joined by two representatives of Lower Saxony, the German state that holds a 20% voting stake. The seven votes in favor came from representatives of the Porsche-Piëch family and Qatar’s sovereign-wealth fund, according to people familiar with the outcome.
To build support, Blume toured Volkswagen facilities last week in a campaign the Journal compared to a political roadshow. At the Wolfsburg headquarters, roughly 10,000 employees packed into a hall to hear him defend the plan in front of Daniela Cavallo, the company’s top union representative. Trade unionists held placards reading “Our jobs aren’t your balance-sheet adjustment,” and booed his introductory remarks about valuing communication with staff, according to people present.
Cavallo acknowledged the company faced a difficult environment but said any decision on job cuts required a detailed strategy first. “Volkswagen is simply not a corporation that operates solely according to capitalist rules,” she said. “Because of its history, Volkswagen also belongs to us, the employees.”
Lower Saxony Premier Olaf Lies, who voted against the plan, embarked on his own tour of factories that Blume has said may not be needed. “Lower Saxony is automotive country, and this must remain so,” Lies said at a Hannover plant where Volkswagen builds its campervans.
Volkswagen employs more workers per vehicle produced than its competitors, and at its Wolfsburg headquarters four in five of the roughly 60,000 employees work in offices rather than on production lines. The company’s complex governance—balancing the Porsche-Piëch family against politicians and Europe’s most powerful union—has slowed decisions in an industry that is moving fast.
If no compromise is reached at Friday’s meeting, the two sides could return to negotiations or Blume’s team could call an extraordinary general meeting of shareholders to vote on the most contentious parts of his agenda. Under a special “Volkswagen law,” such proposals would require 80% support from shareholders for the most important decisions—potentially giving Lower Saxony a blocking minority. Those legal complexities have never been tested.