Old industry restructuring to invest in electric vehicles… Volkswagen cuts 5,000 people in Germany

Input 2021.03.15 13:30

Volkswagen, a German automobile company, will cut jobs for up to 5,000 people. This is to secure investment funds for future vehicles such as electric vehicles. Global automakers such as General Motors (GM) and Ford, as well as Volkswagen, have undergone restructuring for many years. However, the restructuring is accelerating as the’electric car clock’ has recently accelerated, such as each automaker has accelerated its EV launch plan and increased the number of vehicles.

According to foreign media such as Bloomberg on the 14th (local time), Volkswagen recently announced that it will lower its cost by 5% by 2023 to secure funds related to electric vehicles and vehicle software. To this end, Volkswagen will conclude labor-management negotiations related to employee reduction by the end of this month. In the industry, Volkswagen is expected to reduce the number of employees by up to 5,000, such as proposing honorary retirement to elderly workers.

In the past, restructuring of automakers was mainly carried out to reduce their bloated body. However, recently, restructuring has been underway to save costs through manpower reduction and invest in the development of future vehicle technologies and services such as electric vehicles and self-driving vehicles. In particular, electric vehicles do not need to maintain the scale of manpower because they have fewer parts and a simple manufacturing process compared to existing internal combustion locomotives. Because of this, automakers are constantly reducing production manpower.

Volkswagen is expected to continue restructuring to invest in future cars. On the day, Gunnar Killian Volkswagen, HR director, said, “To raise the necessary investment funds in the future, costs must be kept strictly controlled.” We will now solidify our position.”

Not only Volkswagen, but also Ford and Daimler AG, most of the global automakers are aggressively restructuring their businesses to invest in future cars. In October last year, Daimler AG decided to cut the cost of its flagship brand, Mercedes-Benz, by 20% over the next five years. On the other hand, it is planning to invest more in the high-end car sector, which is profitable, and invest its profits in the electric car sector.

At the time, Ola Kelenius Daimler, chairman of the board of directors, said, “We will put our hands on structural cost savings for sustainable gains.” “We are negotiating the issue of reducing staff with the company.”

Recently, Ford has also closed or sold five factories in Europe, including three in Russia. In the case of the remaining factories, manpower was reduced by 20%, such as reducing production shifts. In an interview with Automotive News on the 9th, Stuart Laurie, Ford, European branch manager, said, “More measures will be needed, such as resizing the facility or repurposed.” “We can end production of engine passenger cars,” he said.