Automotive giant Volkswagen AG (VLKAF) has announced that it is considering closing some factories in its native Germany for the first time as it looks to achieve cost savings.
The potential plant closures come as management at Volkswagen clashes with its labour unions during contract negotiations, according to multiple media reports.
Volkswagen’s leadership have said that several plants located in the company’s home country of Germany are obsolete. It has identified sites in Osnabrueck and Dresden for potential closures.
The IG Metall union fiercely opposes any plant closures within Germany and has vowed to fight any moves that will impact workers at the automaker.
Volkswagen currently employs 680,000 people worldwide. During current contract negotiations, management has also brought up the possibility of ending the company’s job security program that has been in place since 1994 and prevents any job cuts until 2029.
Executives at Volkswagen say cost cutting is necessary to help the automaker compete in the global marketplace and ensure its long-term survival.
To that end, management at Volkswagen has targeted 10 billion euros ($11 billion U.S.) in cost savings by 2026 as it attempts to reduce spending and transition to electric and hybrid vehicles.
The cost-cutting measures also come with the German economy, Europe’s largest, currently in a recession.
The IG Metall union has vowed to fight any changes at Volkswagen, which is Germany's largest industrial employer and Europe's biggest automaker.
The stock of Volkswagen has declined 35% over the last five years and currently trades at $97 Euros ($107.08 U.S.) per share.
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