The Cost of Volkswagen's Restructuring Plan May Reach 16 Billion Euros
The German automotive giant is initiating the largest downsizing process in its history due to Chinese competition and excessive production capacity.
Quick Look
- Volkswagen faces a cost of 16 billion Euros in the restructuring process it initiated due to Chinese competition and overproduction.
- The plan envisages the closure of four factories in Germany and the layoff of around 60 thousand employees.
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Why It Matters
Volkswagen states that it is experiencing an existential crisis due to Chinese competition, high customs duties and excess production capacity.
The cost table of the historical restructuring plan, which German automotive giant Volkswagen reached an agreement on last week, started to become clear, according to the information provided by sources close to the subject on Thursday. It is stated that the total cost of the tens of thousands of layoffs and possible factory closure steps that the company has discussed is estimated at approximately 16 billion Euros.
Volkswagen, Europe's largest automobile manufacturer; It started the sharpest contraction process in its history, emphasizing that it was facing an "existential crisis" due to reasons such as increasingly harsh Chinese competition, high customs duties and excessive production capacity.
THERE ARE FOUR FACTORIES AND 60 THOUSAND EMPLOYEES AT THE TARGET
Within the scope of the prepared radical plan, alternative scenarios are being evaluated for four factories in Germany, where production lines are expected to stop in the next ten years. However, the most striking aspect of the process is the employment cuts. According to the plan, it is stated that the number of personnel to be laid off will be approximately 50 thousand more than the previously anticipated targets.
The Volkswagen spokesperson declined to make an official comment about these huge costs, which were first brought to the agenda by the German magazine Der Spiegel.
COST DISTRIBUTION OF CLOSING AND EXTRACTIONS
According to the details leaked by the source speaking to Reuters, the distribution of the invoice is planned as follows:
Open Questions
- Is it clear in which regions the layoffs will be concentrated?
- What will be the unions' reaction to this plan?
