Greener, but Leaner: It's Volkswagen's Turn to Cut Jobs

Matt Posky
by Matt Posky
greener but leaner its volkswagens turn to cut jobs

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]

Join the conversation
 1 comment
  • ToolGuy ToolGuy on Mar 13, 2019

    It actually appears that VW is taking some lessons to heart regarding transparent communication.

  • Fahrvergnugen NA Miata goes topless as long as roads are dry and heater is running, windscreen in place.
  • 3SpeedAutomatic As a side note, have you looked at a Consumers Report lately? In the past, they would compare 3 or 4 station wagons, or compact SUVs, or sedans per edition. Now, auto reporting is reduced to a report on one single vehicle in the entire edition. I guess CR realized that cars are not as important as they once were.
  • Fred Private equity is only concerned with making money. Not in content. The only way to deal with it, is to choose your sites wisely. Even that doesn't work out. Just look at AM/FM radio for a failing business model that is dominated by a few large corporations.
  • 3SpeedAutomatic Lots of dynamics here:[list][*]people are creatures of habit, they will stick with one or two web sites, one or two magazines, etc; and will only look at something different if recommended by others[/*][*]Generation Y & Z is not "car crazy" like Baby Boomers. We saw a car as freedom and still do. Today, most youth text or face call, and are focused on their cell phone. Some don't even leave the house with virtual learning[/*][*]New car/truck introductions are passé; COVID knocked a hole in car shows; spectacular vehicle introductions are history.[/*][*]I was in the market for a replacement vehicle, but got scared off by the current used and new prices. I'll wait another 12 to 18 months. By that time, the car I was interested in will be obsolete or no longer available. Therefore, no reason to research till the market calms down. [/*][*]the number of auto related web sites has ballooned in the last 10 to 15 years. However, there are a diminishing number of taps on their servers as the Baby Boomers and Gen X fall off the radar scope. [/*][/list]Based on the above, the whole auto publishing industry (magazine, web sites, catalogs, brochures, etc) is taking a hit. The loss of editors and writers is apparent in all of publishing. This is structural, no way around it.
  • Dukeisduke I still think the name Bzzzzzzzzzzt! would have been better.