PREVOD SR-What Volkswagen Just Announced Will Change Europes Auto Industry Forever

PREVOD SR-Ono što je Volkswagen upravo najavio zauvijek će promijeniti evropsku automobilsku industriju

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6. sep 2024.
What Volkswagen Just Announced Will Change Europe's Auto Industry Forever

So, let’s talk about Volkswagen, one of the biggest names in cars and a true symbol of German pride. It’s hard to believe, but this massive company is facing a huge crisis right now. For the first time in its 87-year history, Volkswagen is actually thinking about closing some of its factories in Germany. Yep, you heard that right! This shocking news could change everything for the German economy and the entire car industry in Europe. With competition heating up, especially from Chinese electric vehicle (EV) makers, Volkswagen's struggles show just how tough things have gotten.

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Volkswagen recently dropped a bombshell by saying it might close some factories in Germany. This is a huge deal because it marks a big shift from the company’s long-standing commitment to its home country, where around 295,000 people work. That’s a lot of jobs on the line! To tackle some serious financial issues, they’re trying to save a whopping €10 billion (which is about $11.1 billion!). That’s a pretty hefty sum, right? Volkswagen’s CEO, Oliver Blume, didn’t hold back when he talked about the situation. He said, “The economic environment has become even tougher, and new players are pushing into Europe.” This really highlights how worried Volkswagen is about staying competitive, especially as they face rising costs and declining sales. If they go through with these closures, it would not only impact the company but also shake the foundations of the German automotive industry.

Now, let’s dive a little deeper into what’s going on. Volkswagen’s troubles aren’t just about their own issues; they’re part of a bigger picture. The whole German manufacturing sector is struggling, and it’s feeling the heat from Chinese EV companies like BYD. These companies are quickly gaining ground, not just in China but also in Europe. In the first half of 2024, Volkswagen saw a 7% drop in deliveries in China, which is their biggest market. To make matters worse, their group operating profit took an 11.4% hit, dropping to €10.1 billion ($11.2 billion). Things aren’t looking great for Germany as a whole, either. The manufacturing sector has been in a recession since early 2022. This downturn is mainly due to the loss of affordable Russian energy after the conflict with Ukraine and a drop in demand from China.

The German manufacturing Purchasing Managers' Index (PMI) has been below 50 for over two years, which means things are contracting. Just last month, the PMI hit a five-month low of 42.4, showing that the sector is really struggling compared to other parts of the world. Dr. Cyrus de la Rubia, the chief economist at Hamburg Commercial Bank, pointed out, “The recession in Germany's manufacturing sector is dragging on way longer than anyone expected.” With orders continuing to fall, Volkswagen’s troubles are a clear sign of the challenges facing the entire German economy. It’s a tough time for everyone involved.

As Volkswagen tries to figure things out, they’re hitting a wall with internal resistance, especially from labor unions. IG Metall, a powerful union, is not happy about the possible plant closures. They’re also pushing back against the company’s plan to scrap an employment protection agreement that’s been around since 1994. This agreement has been a safety net for workers, giving them job security. Thorsten Groeger, IG Metall’s lead negotiator, slammed the management's plan, saying, “Today, the board presented an irresponsible plan that shakes the very foundations of Volkswagen.” The union feels that these proposed changes are not just short-sighted but could also threaten thousands of jobs. That’s a big deal, and you can bet the workers are feeling the pressure. Volkswagen’s supervisory board, which includes labor representatives, will play a key role in any decisions about closures. This sets the stage for a potential showdown between management’s need to cut costs and the union’s commitment to protecting jobs. It’s a complicated situation, and tensions are running high.

Now, let’s talk about what all this means for the workers. The idea of ending the employment protection agreement raises serious worries about job security for Volkswagen employees. If this happens, it could lead to significant layoffs and factory closures, affecting not just the employees but also the communities that rely on Volkswagen’s presence. The company’s dedication to Germany is being tested as economic pressures mount. Volkswagen has said they’re open to talking with employee representatives to explore other ways to restructure without resorting to closures. But time is running out, and they need to act quickly to tackle their financial issues.