The German industrial giant and cult brand Volkswagen is facing difficult decisions that could drastically change the situation not only in their business, but in the entire German automobile industry, and therefore the European one, considering that Germany was one of the supporting pillars of this branch of the economy in the continent. Although we recently wrote about the problems affecting the car industry in Germany, and how it can reshape the market, now there have been concrete announcements.
In the shadow of the slowdown of the European car market and problems in global competitiveness, Volkswagen plans to close at least three of its factories in Germany, out of a total of 10 it has in the country, which could result in the dismissal of tens of thousands of workers, according to the DPA agency.
The company has already canceled long-standing contracts on job security, and From the middle of next year, Germany will allow economically conditioned dismissal of workers, as reported by the local media. A popular brand faces surpluses in production, more precisely with around 500,000 unsold vehicles.
The decision worsens the overall situation, at a time when the economic climate in Germany is inherently challenging. Daniela Cavallo, president of the company’s central workers’ council, said that none of the factories are safe and that the management has proposed a 10 percent wage cut while freezing further raises for the next two years, German media reports.
Closing the factories would be a radical move for the company, which has never closed any of its factories in Germany or anywhere in the world in the last thirty years.
With increased competition from China, where electric cars are significantly cheaper, and a 14 percent drop in net profit in the first six months of this year, Volkswagen is facing tough choices. What further complicates the situation is the abolition of government subsidies for the purchase of electric cars, which further leads to a drop in demand, even though companies have already invested heavily in the development of the technology.
That puts added pressure on a company already hit by a situation known as ‘dieselgate’ – a scandal that erupted in 2015, when the United States Environmental Protection Agency revealed that Volkswagen used software in its diesel engines that could manipulate the results of emissions tests. The software activated emissions controls to meet standards when necessary, while under normal driving conditions it emitted significantly more harmful gases than allowed.
Will there be major changes in the company’s strategies and plans, will the German government react with certain measures, or will China conquer the market more and more, and how will this affect all other branches of industry, are the following questions.
Energy portal
Source: energetskiportal.rs
