Volkswagen, Seeking to Cut Costs, Considers German Plant Closures

Volkswagen warned on Monday that it would consider closing factories in Germany for the first time in its 87-year history and end a decades-old guarantee of job security for workers, as it faces profitability problems amid increasing pressure from Asian competitors.

The company said in a statement that the measures were meant to shore up its namesake brand, but it declined to provide any details.

“In the current situation, even plant closures at vehicle production and component sites can no longer be ruled out without swift countermeasures,” the company said. “The situation is extremely tense and cannot be resolved through simple cost-cutting measures.”

IG Metall, the powerful union that represents German automotive workers, responded by saying it would fight any job cuts. It added that Volkswagen managers had told it that a cost-cutting plan announced last year was not working and that additional savings worth “billions” were needed. Volkswagen declined to confirm that number.

Last year, Volkswagen and worker representatives agreed to measures that would save the company 10 billion euros, or $11 billion, by 2026. But those plans, which included job cuts largely based on attrition, are no longer enough, the company said on Monday.

“The European automotive industry is in a very demanding and serious situation,” Oliver Blume, chief executive of Volkswagen, said in a statement. “Germany in particular as a manufacturing location is falling further behind in terms of competitiveness. In this environment, we as a company must now act decisively.”