Hampered by seemingly unending scandal troubles, Volkswagen is struggling to remain profitable. The company is expected to reach an operating margin of only two percent in 2016, and as a means to double that, VW is working on a turnaround plan called "Strategy 2025", which will include cutting 30,000 jobs.
The carmaker has reached an agreement with its labor unions, which includes a pledge to create 9,000 new battery production and mobility service jobs in Germany. As the news agency Reuters reports, Volkswagen will commit to avoid forced redundancies in Germany until 2025. The plan is to improve the German plants' productivity by 25 percent, reaching annual savings of $3.9 billion by 2020, resulting in a profit margin of four percent; still, Volkswagen will not be able to match the profitability of rivals such as Peugeot, which operates on a six percent profit margin.
Volkswagen's turnaround plan is designed to help it move away from these difficult Dieselgate years, instead focusing on mobility services and electric vehicles, which costs R&D money. "In view of the major challenges and the still unresolved diesel issue, this year's investment planning session took place at a particularly challenging time," says Volkswagen group's CFO Frank Witter.
But as Reuters says, Volkswagen employs 610,000 workers globally with a partially unprofitable 340-model range; Toyota's global work force of 350,000 people managed to produce more profitable cars last year. In addition to 23,000 job cuts in Germany, which will be partially reached by buyouts, early retirements and reducing the number of people working part-time, VW will also have to do more with less people in North America, Brazil and Argentina – without addressing the time frame specifically yet. Previously reported cost-saving efforts have included the shelving of Volkswagen Motorsport's WRC program, and even the workers' yearly bonuses have been at stake.
"The most important message is the jobs of the core workforce is secure," VW's works council chief Bernd Osterloh said at a news conference in Wolfsburg. VW's Karlheinz Blessing echoed the statement, saying that VW's workers will have to adapt and re-train for the future."But the effort will be worthwhile: we will make Volkswagen slimmer, faster and stronger, safeguarding employment in Germany in the long term", said Blessing.
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The carmaker has reached an agreement with its labor unions, which includes a pledge to create 9,000 new battery production and mobility service jobs in Germany. As the news agency Reuters reports, Volkswagen will commit to avoid forced redundancies in Germany until 2025. The plan is to improve the German plants' productivity by 25 percent, reaching annual savings of $3.9 billion by 2020, resulting in a profit margin of four percent; still, Volkswagen will not be able to match the profitability of rivals such as Peugeot, which operates on a six percent profit margin.
Volkswagen's turnaround plan is designed to help it move away from these difficult Dieselgate years, instead focusing on mobility services and electric vehicles, which costs R&D money. "In view of the major challenges and the still unresolved diesel issue, this year's investment planning session took place at a particularly challenging time," says Volkswagen group's CFO Frank Witter.
But as Reuters says, Volkswagen employs 610,000 workers globally with a partially unprofitable 340-model range; Toyota's global work force of 350,000 people managed to produce more profitable cars last year. In addition to 23,000 job cuts in Germany, which will be partially reached by buyouts, early retirements and reducing the number of people working part-time, VW will also have to do more with less people in North America, Brazil and Argentina – without addressing the time frame specifically yet. Previously reported cost-saving efforts have included the shelving of Volkswagen Motorsport's WRC program, and even the workers' yearly bonuses have been at stake.
"The most important message is the jobs of the core workforce is secure," VW's works council chief Bernd Osterloh said at a news conference in Wolfsburg. VW's Karlheinz Blessing echoed the statement, saying that VW's workers will have to adapt and re-train for the future."But the effort will be worthwhile: we will make Volkswagen slimmer, faster and stronger, safeguarding employment in Germany in the long term", said Blessing.
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