Volkswagen CEO says ‘smarter solutions’ possible beyond closing plants
(Bloomberg) — Volkswagen AG Chief Executive Oliver Blume said there are “smarter solutions” to save money than closing factories and praised progress already made in cutting costs in remarks that could help ease tensions with the manufacturer’s powerful union.
Labor Party officials accused Blume of creating fear in the workforce and demanded that he explain himself directly to staff after details of a sweeping restructuring plan in Germany, which included nearly 100,000 job cuts and factory closures, were published in the media.
In an interview in the Sunday edition of newspaper Bild, Blume appeared to rule out plant closures, saying “there are smarter solutions” for Europe’s largest carmaker. Last year, VW said it had managed to cut costs at its German plants by an average of a fifth, describing this as “strong progress”.
“Our products are extremely popular, but we’re not making enough money on them,” Blume told the newspaper. “So we must continue to reduce costs across the board.”
Without the support of workers’ representatives, who make up 10 of the seats on the supervisory board, the future of the CEO’s restructuring plan is uncertain. According to local media reports, the proposal was rejected by 12 of 19 board members at a meeting in Wolfsburg on Thursday.
VW’s works council said on Saturday there had been a “huge loss of confidence” in Blume as a result of the plans being leaked before the board met to discuss them. He said there was “almost nothing” left of the goodwill he initially gained among staff after taking over in 2022 and that he would have to answer to them at meetings after the summer break.
Following the supervisory board meeting, management outlined only vague objectives, including an effort to reduce complexity in numerous product offerings with the aim of concentrating the product range in the most attractive market segments.
“We aim to increase sales volume per model, so we are systematically modernizing our product portfolio,” Blume said in the Bild interview.
Besides relatively high labor and energy costs and bureaucratic burdens, VW is grappling with increasing competition and declining demand from China; US trade tariffs have depressed returns for luxury brands Audi and Porsche.
“The environment in which we operate has never been as challenging and fraught with risks as it is today, with geopolitical tensions, trade barriers, regulations, market turmoil and intense competition,” Blume told Bild.
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