German Automotive Giant Volkswagen Will Do Massive Layoffs And Close Three Factories

Volkswagen Sachsen GmbH Chemnitz plant. (Doc. Volkswagen Group)

JAKARTA - German automotive giant Volkswagen has been facing a crisis period in recent months. To overcome this, the manufacturer plans to close at least three factories in Germany, cut off tens of thousands of employees, and shrink the remaining factory operations in the country. This is part of a massive restructuring plan that exceeds the expectations of many parties.

Launching Reuters, Tuesday, October 29, this decision was driven by various pressures facing Volkswagen. The high cost of energy and labor, the intense competition from Asia, the weakening demand in Europe and China, as well as the transition to electric vehicles slower than expected, have all become a factor that suppresses the company's finances.

Meanwhile, Chairman of the General Factory Council and Volkswagen Group AG Daniela Cavallo, announced the plan on Monday, October 28, to employees at the company's headquarters in Wolfsburg, Germany. The announcement was met with protests from workers worried about losing their jobs. Unions threatened to strike in December if negotiations with the company's management did not yield the desired results.

Volkswagen's restructuring plan also sparked wider concern. Germany, which has been known as a country with a strong auto industry in Europe, is now facing challenges from more agile competitors and has lower production costs.

This situation prompted calls for the German government to take steps to save the national automotive industry. The German government itself said it was in intensive communication with Volkswagen and representatives of workers. German Chancellor Olaf Scholz stressed that mismanagement decisions in the past should not harm workers.

Analysts see that the German auto industry is in a difficult situation. New car sales are predicted not to increase in the near future. Therefore, significant cost-saving measures need to be taken immediately to prevent greater financial losses.