JAKARTA Europe's largest automotive producer Volkswagen (VW) is facing a crisis that threatens its position as a global giant. Labor disputes, cost reduction measures, as well as pressure from competitors, especially Asian manufacturers, have forced VW to fight hard to survive in an increasingly competitive market.
At its peak, on December 9, about 68,000 Volkswagen workers at nine factories in Germany staged a massive strike. Led by the IG Metall union, this action became the largest in the history of the VW industry, reflecting an increasing level of frustration among employees.
Launching Autoblog, December 16, union leader Thorsten Groeger said that although the latest negotiations show progress, the risk of escalation remains. If no agreement is reached in the next negotiations on December 16-17, the strike could extend to a full 24 hour action or even strike indefinitely.
The dispute was sparked by Volkswagen's proposal for pay cuts and potential factory closures, which the company considers an important step towards dealing with declining demand in Europe and fierce competition from low-cost rivals from Asia. However, the move was strongly rejected by workers worried about losing their rights.
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Volkswagen's problems are not limited to internal companies. This strike comes amid economic and political uncertainty in Germany. Chancellor Olaf Scholz, who faced a decline in popularity ahead of the upcoming elections, publicly urged Volkswagen to avoid factory closures, adding to political pressure on the precarious situation.
On the financial side, Volkswagen's condition is also increasingly worrying. Shares of the company have fallen nearly 25 percent so far this year, making it one of the worst among European automakers. Critics, including the union, blamed management for poor handling of the crisis deemed to undermine public trust in the VW brand.
Not only that, but Volkswagen also faces major challenges in the electric vehicle (EV) market. Rivals from China such as BYD continue to expand their global dominance with aggressive innovation and efficient labor. This situation makes Volkswagen must immediately develop a new strategy to compete in the electrification era.
Volkswagen CEO Oliver Blume insists that cost reduction measures are part of the company's adaptation to industrial change. However, is this move enough to save VW from the layered crises it is facing? The world is now awaiting the next major step of the European automotive giant.
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