Fight back against Volkswagen: Their Defiant Response
In response to the competitive landscape in the automotive industry, German car manufacturers are implementing significant cost-cutting measures. These measures, which include large-scale job cuts, factory closures, restructuring, and voluntary redundancies, are aimed at addressing pressure from tariff impacts, falling sales, especially in China, and the transition to electric vehicles.
Volkswagen, one of the hardest-hit companies, plans to cut over 35,000 jobs domestically by 2030. Brands like Audi and Porsche are also cutting jobs: Audi about 7,500 and Porsche 3,900 by 2029. Mercedes-Benz is pursuing workforce reductions via buy-outs and voluntary redundancies, while BMW is unique among the big German automakers in avoiding major layoffs so far.
The impact of these job reductions is particularly felt in Eastern German states, such as Ludwigsfelde, home to a large Volkswagen factory. The employment-heavy automotive sector forms a vital part of these regional economies, so job reductions have a significant social and economic consequence there.
Brandenburg's Minister of Economics, Daniel Keller, expresses concern about the potential disproportionate impact of these cost-cutting measures on eastern states. Keller believes that large German car manufacturers should not prioritize job cuts in the east to stabilize western locations. He emphasizes the need for Mercedes to provide a clear perspective for the Ludwigsfelde location.
Keller also voices concern about car manufacturers potentially withdrawing from eastern Germany in times of problems. He considers a one-sided consolidation at the expense of eastern Germany to be "unacceptable." Keller intends to arrange another meeting with the carmaker in Stuttgart to discuss these concerns.
Suppliers critical to automotive manufacturing, such as Bosch, ZF, Continental, and Schaeffler, face an even larger risk wave with "sweeping job cuts" in 2024 due to excess capacity, declining internal combustion engine vehicle sales, and stiff competition in electric vehicle technology.
These cost-cutting programs are due to various factors, including competition from new players in China and U.S. tariffs. The IG Metall union fears job cuts at the Mercedes plant in Ludwigsfelde from 2030 onwards. Mercedes has assured the plant's employees that they will be employed until the end of 2029.
Despite the focus on eastern Germany, it's important to note that these cost-cutting programs are affecting the entire nation. Keller's concerns about job cuts in eastern Germany are not limited to the Mercedes plant in Ludwigsfelde. The minister believes that many employees in eastern Germany have contributed to the success of these companies over decades.
In conclusion, German car manufacturers are facing challenging times, with thousands of jobs being cut, factories being restructured, and potential plant closures. These measures have direct negative employment impacts in Eastern German states like Ludwigsfelde, a key automobile manufacturing location. Minister Keller's concerns highlight the need for a balanced approach that considers the long-term impact on all regions of Germany.
[1] Source: Der Spiegel, 2023 [2] Source: Reuters, 2023
The finance sector in Germany may experience turbulence due to the job cuts and factory closures in the automotive industry, as layoffs could lead to decreased consumer spending.
These cost-cutting measures in the transportation industry, particularly in the automotive sector, are not confined to just Eastern Germany; they affect the country's economy as a whole.
