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volkswagen is considering closing factories in germany for the first time and scrapping wage agreements to further cut costs, bloomberg reported.

the potential measures target not only its main passenger car brands but also other group entities, according to a statement released on monday. the company plans to close at least one large car manufacturing plant and a parts plant in germany, while also potentially trying to terminate a job security agreement reached between the company and unions that aims to protect employment until 2029.

volkswagen's passenger car brand has long suffered from low profit margins, and the company has been looking to cut costs. cost cutting has become more difficult amid a difficult transition to electric vehicles and slowing consumer spending. volkswagen ceo oliver blume said in a statement:

“the environment has become more severe, new competitors are entering europe, and germany is falling further and further behind in terms of competitiveness.”

vw has about 650,000 employees worldwide, nearly 300,000 of whom are in germany. in addition, half of the seats on vw's supervisory board are held by union representatives, and the german state of lower saxony (which owns a 20% stake) usually sides with the unions. if implemented, these closures would be the first factory closures in germany in vw's 87-year history, which would put vw on a collision course with germany's powerful unions.

clashes with unions have historically driven down many previous ceos, including ending or shortening the tenures of bernd pischetsrieder, wolfgang bernhard and herbert diess, all of whom tried to push for greater efficiency at vw's german operations.