German Chancellor Olaf Scholz said closing factories would be a mistake for Volkswagen, adding that Europe’s largest carmaker had a responsibility to its employees.
Volkswagen is locked in a bitter dispute with employees over wage cuts and possible plant closures aimed at countering high costs in Germany and much cheaper Asian rivals entering Europe.
The two sides enter a fourth round of negotiations on Monday.
“Specific decisions will be negotiated between the owners and workers’ representatives,” Scholz told the Funke Media group. “My opinion is clear: Closing the sites would not be the right way.”
“It would not be right because bad management decisions have contributed to the difficult situation,” the German chancellor added.
Lower Saxony is Volkswagen’s second-largest shareholder and its prime minister, like Scholz, has urged the group to avoid closing sites.
Germany had the highest average hourly wage for auto factory workers in the world at 59 euros ($66) in 2022, according to the German Automobile Association, in contrast to 21 euros in the Czech Republic and 16 euros in Hungary, while in China the average hourly wage is just $3, according to a Reuters analysis.
Volkswagen expects annual European car demand to fall to about 14 million vehicles from about 16 million before the pandemic.
Some carmakers in the market have already taken steps to cut costs. French carmaker Renault, for example, has cut thousands of jobs in the region as part of a 3 billion euro cost-cutting drive that began in 2021, and Stellantis, formed by the merger of Fiat Chrysler and PSA, is cutting nearly 20,000 jobs in Europe over the period 2021-24.
Meanwhile, Ford will cut 5,400 jobs in Europe and plans further cuts under a regional restructuring plan that includes halting production at its Saarlouis, Germany, plant before ramping up production in Spain, where costs are lower.
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