Volkswagen's plan to close four German factories rejected by board – report

The plan floated by Volkswagen Group CEO Oliver Blume to close four factories in Germany and fire up to 100,000 people globally has reportedly been rejected by the automaker's supervisory board.

Like other large German corporations, Volkswagen has two boards: an executive board headed by the CEO, and a supervisory board, half of which are elected by the company's workers. The executive board runs the company, but important decisions have to be passed by the supervisory board, which is also in charge of executive appointments and compensation.

As reported at the end of June, Mr Blume and his team have been drawing up a dramatic restructuring plan to help improve the paper-thin profit margins enjoyed by the mainstream Volkswagen brand.

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Late last week the automaker confirmed the executive team had presented a restructuring plan to the supervisory board. Official statements to the media were light on detail, but said the plan included 12 initiatives.

One of them would see the automaker "gradually" reduce its model range by half, and cut variant complexity by 75 per cent. Another would see the manufacturer reduce its annual production capacity from 10 million cars to nine million.

While the company's media statement didn't elaborate on how this would be achieved, last month's reports claimed the executive team wanted to close four German factories: Volkswagen's plants in Hanover, Zwickau and Emden, as well as Audi's factory in Neckarsulm. The automaker would also cut a further 100,000 jobs globally by 2030, on top of the 50,000 already agreed to with the unions.

Local sources cited by Manager Magazin say the plant closures have now been rejected by the 19-person supervisory board, with the 10 workers' representatives and two members representing the German state of Lower Saxony all voting against the proposal.

According to the German Press Agency (via Manager Magazin), an interview with Mr Blume was published on the Volkswagen intranet where the CEO said "excess capacity costs money".

He confirmed that no new products have been scheduled for the Emden, Hanover, Zwickau and Neckarsulm plants in the 2030s. With their closure blocked for now, it's not clear what will become of them, with the CEO stating "intelligent solutions are always better than closing a plant".

Although he didn't go into what these solutions might be, Volkswagen is reportedly in the process of selling its Osnabrück factory to Rafael Advanced Defence Systems, an arms-maker owned by the Israeli government, to produce support components for the Iron Dome missile defence system.

According to Automotive News, Volkswagen's works council sent a special edition of its newsletter to the company's employees stating there's been "a massive loss of trust" in Mr Blume, who, when he became CEO in 2022, claimed he would work "for the people".

“He had certainly earned a great deal of initial goodwill from large sections of the workforce for this stance,” the works council said. “By now, however, virtually nothing of that remains.”

The council also chastised the CEO who held out "for weeks to share the key facts regarding his future plan with tens of thousands of deeply unsettled – indeed, frightened – employees".

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