Volkswagen CEO, labour boss set for clash as crucial board meeting nears

Volkswagen's management and labour leaders hardened their positions on Wednesday ahead of a crucial board meeting next week, with CEO Oliver Blume ‌pushing for deeper cost cuts and unions opposing layoffs and plant closures in the automaker's biggest ever restructuring.

Europe's biggest automaker is considering measures that could double the current number of job cuts, shut down factories and lead to some divisions being carved out as it seeks to revive profits ‌and compete with Chinese rivals. Addressing workers at Volkswagen's Emden plant, one of the plants that could face closure under the plans, ‌Blume said savings efforts needed to continue, warning that costs were still too high when compared with rivals.

"This journey is not over. Because we not only measure ourselves against our own past performance. We measure ourselves against the best locations in Europe," Blume told staff, according to excerpts of his speech shared by the company. "Labor costs ⁠today are ​more than double those of ⁠comparable European locations. And when it comes to factory costs, other plants are still significantly cheaper. This is not a criticism — it is the reality against which we ⁠must measure ourselves," Blume said.

The plan will be discussed at a supervisory board meeting on September 4, with labour representatives and the state of Lower Saxony, ​which have traditionally been opposed to major job losses, commanding a majority. Emden, an electric vehicle plant in Volkswagen's home state ⁠of Lower Saxony, is one of four factories that currently lack a business plan beyond 2030. Volkswagen's Osnabrueck plant, about 150 kilometres south of Emden, is another site under threat. ⁠Daniela ​Cavallo, head of Volkswagen's powerful works council, told reporters at Osnabrueck that layoffs and site closures could not resolve the company's crisis stemming from tariffs, aggressive Chinese peers and a weak European market. "A vision for the future must consist of many different elements. It cannot ... be ⁠solely about sites, labour costs and staff cuts," she said.

Blume, who is touring Volkswagen sites this week to build support for his cost-cutting ⁠plan, has described plant closures as ⁠a last resort. He also said that Volkswagen's responsibility would not end if it failed to secure the plant's future.

"We will fight for industrial prospects and jobs at our locations, with partners, with investors, and ‌with new industrial solutions," ‌he said.