A day after
much-anticipated new strategy turned out to be little more than "build it, and they will come,"
announced a stunning restructuring plan for its
brand that could see 20,000 jobs cut in the next three years.
Although the company said the job cuts could be accompanied by a reduction in production capacity, CEO Bernd Pischetsrieder said he had no plans to shut any plants. The key objectives of the restructuring programme are:
- the elimination of productivity deficits, especially at vehicle assembly plants
- running plants at full capacity, including capacity adjustments where necessary
- "more competitive personnel expenses"
- a reorganisation of component production.
The restructuring plan follows announcements earlier this week of encouraging financial performance in 2005, with profit before tax for global operations rising 60 percent to $2.05 billion, buoyed by strong results from its automotive division in the fourth quarter. Nonetheless, problems remain in China and the U.S., where the VW brand is struggling in the face of mounting competition. Pischetsrieder pointed out that despite productivity gains, "We continue to incur significant losses on cars exported from Germany to the USA."
The market rewarded VW with an 8 percent increase in its stock price after the announcement, marking a three-year high.