The compromise gets VW what it wants and is an easier option for labor leaders to accept.
Volkswagen likely won’t resort to mass layoffs in the wake of the diesel emissions scandal. Instead, the automaker will potentially reduce its workforce by as many as 25,000 people mostly in Germany over the next 10 year by not rehiring for these positions after the current employees’ retirement, Automotive News Europe reports. This cost-cutting strategy still saves money but without the bad press of dumping thousands of workers at once.
Company execs and labor leaders have been discussing cost-cutting options since June, according to Automotive News Europe. Insider sources allege the strategy of not replacing retiring workers seems to be the best compromise for both sides. The works council can tell employees it is protecting jobs, and VW gets a 20 percent drop in the firm's German labor force.
VW desperately needs to find ways to save money because the company must finance major innovations in electric vehicle technology and pay for the mounting costs of its diesel emissions scandal. In the United States alone, the company owes billions in various fines and payments. There’s still the possibility the number could grow because regulators still don’t have a decision about how to fix the 3.0-liter V6 TDI. Punishments in places like South Korea, Australia, and Italy only add to the total amount.
The company plans a product offensive, particularly in the U.S, as a way to dig out of the losses. A variety of new crossovers are reportedly on the way. Plus, VW Commercial Vehicles and maybe even Skoda could enter the market.
From a global perspective, VW is taking a more serious stance on electric vehicles. Concepts like the Budd-e and I.D preview these future models, and the production versions should start arriving around 2020. In China, where VW is the leading automaker, the company has a new joint venture on the way that is building low-cost EVs.
Source: Automotive News Europe