Showdown At Volkswagon.

Analysis - From peace-maker to taboo-breaker, VW boss Blume takes on the unions. If you read between the lines, a tipping point of union power vs ongoing Corporate viability has been passed, and he’s doing something about it. Come hell or high water.”
Volkswagen boss Oliver Blume, already battling slowing demand for electric cars and Chinese rivals, must now put aside his mantle as team player to tackle yet another tough opponent, Germany’s powerful labour unions.
The pressure on Europe’s top carmaker was laid bare this week when Volkswagen disclosed it was not only planning to scrap a 30-year old job security scheme but weighing the closure of plants in Germany.
Moritz Kronenberger, portfolio manager at Volkswagen shareholder Union Investment, dubs these the company’s “two holy cows”.
By taking them on, Blume sets a collision course with one of Germany’s mightiest stakeholder groups, the IG Metall union, whose main goal is to protect jobs and sites and safeguard the favourable working conditions in Europe’s biggest economy.
VW works council head Daniela Cavallo said unions would “fiercely resist” the plans, ruling out any factory closures on her watch. She said a staff meeting on Wednesday, where management will face workers, would be “very uncomfortable”.
Volkswagen has not closed a plant since 1988 when it shut its Westmoreland site in Pennsylvania. In July it said it might close an Audi factory in Brussels citing a sharp drop in demand for high-end electric cars.
The problem: German industry is falling further behind global competition due to high energy and labour costs, forcing some of its most storied companies, including Thyssenkrupp, to review deals with workers long seen as sacrosanct.
Investors are taking note, with Volkswagen shares down by almost a third over the past five years, making it the worst performer among major European carmakers.
The problem for Blume, 56, and the reason he has little choice other than to square off with IG Metall, is how thinly spread the sprawling VW Group has become amid growing competition, most notably from China.

Summary:
Company will look at possible plant closures in Germany.
Automaker battling failing competitiveness and investment needs.
Labour controls 50% of supervisory board, can block changes.

https://www.reuters.com/business/autos-transportation/peace-maker-taboo-breaker-vw-boss-blume-takes-unions-2024-09-03/