By on March 13, 2019

Volkswagen Group just announced a restructuring plan aimed at raising the company’s operating margin to 6 percent. Unfortunately, the strategy involves a staffing reduction of up to 7,000 individuals by 2023 — with the automaker saving an estimated 5.9 billion euros in the process.

While legitimate layoffs aren’t expected to take place for at least a few more years, VW claims the “automation of routine tasks” will make the jobs unnecessary, adding that the staffing cuts could be done by simply not replacing employees who take an early retirement package. 

“The potential number of employees born during the next three defined periods eligible for partial retirement totals about 11,000,” the company said in a release. “Restructuring along the demographic curve is therefore possible. At the same time some 2,000 new jobs are to be created in Technical Development, which relates to electronics architecture and software. With regard to all measures, Volkswagen has given its workforce a job security guarantee until at least 2025.”

With a slimmer staff, reduced complexity and material costs, and increased digitization, VW claims its restructuring program should begin achieving the desired results by the end of this year.

“We have already achieved a great deal with the pact for the future: but there is still much more to do if we are to manage the challenges facing us beyond 2020 as well,” said VW COO Ralf Brandstätter. “We will significantly step up the pace of our transformation so as to make Volkswagen fit for the electric and digital era. Volkswagen is to become more efficient and agile and a more attractive and modern employer, especially in administration. Initial constructive talks with the Works Council on the planned implementation of the digitalization roadmap in the administrative areas of the company have already taken place.”

Ah, electrification. While almost everyone agrees there’s another recession looming on the horizon, most automakers’ restructuring plans revolve around prepping for mobility projects — not enduring a less-friendly economy. However, Volkswagen has been working on this strategy for a while. The automaker signed a labor pact in 2016, defining a pathway to generate 3 billion euros in annual savings while cutting 30,000 jobs. Impressively, it’s managed to come within 600,000 euros of its annual goal without having to eliminate that many positions.

This year, VW hopes to see revenue growth of as much as 5 percent and a return on sales of between 4 percent and 5 percent. Meanwhile, it intends to earmark 19 billion euros for investment in future technologies through 2023.

[Image: Volkswagen]

 

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