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cailianshe news, september 4 (editor: shi zhengcheng)after volkswagen group announced this week that it was considering "closing german factories for the first time in history" and ending a 30-year job protection agreement, the company's management held a general staff meeting on wednesday to explain their decision amid the angry condemnation of tens of thousands of employees.

(photo of volkswagen staff meeting)

according to the volkswagen workers' union,at least 16,000 employees gathered in and outside the conference hall of the wolfsburg headquarters factory on wednesday. many workers at the scene held signs or shouted loudly: "we are volkswagen, you are not."

judging from volkswagen’s history, while the management was thinking about how to “reduce costs and increase efficiency”, their own position also became precarious.

why cut spending?

amid the jeers of workers shouting "goodbye" (auf wiedersehen), volkswagen group ceo oliver blumer, chief financial officer arno antlitz and other executives took center stage.

in prepared remarks, antlitz said:the demand for cars in the european market has not recovered since the outbreak, and the delivery volume of the entire automotive industry is 2 million units lower than the peak. among them, volkswagen lost about 500,000 units in sales, equivalent to the production capacity of two factories. the group needs to improve productivity and reduce costs.

antlitz stressed that the market (for that part of the car) no longer exists.without expecting sales to recover, the group's core volkswagen passenger car brand will probably only have "a year, maybe two years" to cut costs and adjust production.

perhaps to avoid further angering the workers, management did not further disclose how to achieve “cost cuts” and “capacity adjustments.” although the group had previously stated that “closing the factory would be the last step,” the cfo’s blunt statement that “two more factories” naturally pointed to potential layoffs and production stoppages.

this also means that the struggle between volkswagen’s management and the trade union has begun a new round.

management faces strong resistance

at the meeting on wednesday, daniela cavallo, a member of the volkswagen group supervisory board and president of the general labor union, made a speech and made it clear thatthe unions will never allow volkswagen to close its german factories, while emphasizing that the employment protection agreement should not only not be canceled, but should also be extended after its original expiration in 2029.

"management's response to the crisis was to close plants, kick my colleagues out, and squeeze more money out of the people who stayed," cavallo said.such thinking is only acceptable in one specific situation, that is, when the entire business model is dead.. i would like to ask all the executives present here, is our business model dead? if so, where is our announcement to the financial market? "

cavallo also accused management of "not fulfilling their responsibilities" and that layoffs would only achieve a small part of the cost reduction target. she also publicly questioned ceo blumer,why did the group invest $5 billion in rivian, a us startup electric vehicle company, when it was forced to close its domestic factories?

unlike most listed companies familiar to chinese investors, although the porsche and piech families control the majority of the voting shares of volkswagen group, they only hold 4 of the 20 seats on the volkswagen group supervisory board.the volkswagen union holds half of the seats, and lower saxony, which holds 20% of volkswagen group's shares, also has two seats.。

(list of volkswagen group supervisory board, source: company website)

the core responsibilities of the supervisory board are to appoint and dismiss senior executives and approve the company's core decisions.

because of this, the battle between volkswagen's management and powerful unions has lasted for decades.the most recent case is the previous ceo herbert diess, diess was forced to resign after publicly promising to break up the "old, rigid" structure due to constant conflicts with unions in the process of promoting electric vehicles.

unlike diess, the "airborne executive", the current ceo blumer is an "old volkswagen man" who is well versed in the corporate culture of the german giant, which makes his latest move even more noteworthy. blumer joined audi after graduating from college in 1994, and later obtained a doctorate in vehicle engineering from tongji university in shanghai. after the "dieselgate" incident broke out, blumer took over the position of porsche ceo in a critical moment. this position, which is closely related to the porsche-piech family, eventually pushed him to the position of ceo of the volkswagen group.

that is why,blumer's decision to close a german factory for the first time in history shows how serious volkswagen's problems are, but he will still face huge resistance.。

in addition to the union, lower saxony governor stefan weil made it clear on monday that he would not support volkswagen's decision to close its local factories, emphasizing that "there are other options." german vice chancellor and economy minister habeck also warned on tuesday that the company needs to consider its responsibilities to its 300,000 employees in germany.