VW deep in crisis

Austro companies are now trembling for their orders

The decline in car production also threatens suppliers.

(Bild: APA/dpa/Julian Stratenschulte)

The VW car company is deep in crisis. Sales are falling and the manufacturer is earning less and less from the vehicles it sells. Now boss Oliver Blume is also planning cuts to the workforce. Three plants could be closed. This also threatens Austrian companies; over 900 companies are active in the supplier industry.

The problems at VW have been building up for years and now the Board of Management is forced to apply the brakes. The Group is changing course and is also cutting back on staff - a taboo!

Tough austerity measures are planned
Four billion euros are to be saved, 30,000 jobs are at risk. Salary cuts of ten percent for everyone and zero wage rounds for 2025 and 2026 are on the cards. Even the locations in Germany are no longer untouchable. Three could close, the others will be downsized. Works council member Daniela Cavallo is outraged: "It is a firm intention to bleed the plant regions dry and the clear intention to send tens of thousands of VW employees into mass unemployment."

Boss Oliver Blume is the main target of criticism. VW earned very well in China for a long time and was thus able to compensate for lower earnings in Europe, but the Chinese market has collapsed. At the same time, demand for e-cars is weakening. However, the Group has recently been able to compensate for the struggling combustion engine business with these for a long time. As a mass manufacturer, VW does not generally have the highest profit margins, so the global car crisis is now hitting the Group particularly hard.

Volkswagen boss Oliver Blume defends the cost-cutting plans.

(Bild: Volkswagen)

The plants in Germany are also "twice as expensive as the competition", he says. The company has to become competitive again, otherwise it will not be able to make essential investments in the future. The Board of Management did not want to say anything specific about the cost-cutting plans; there will be news on this during the wage negotiations on Wednesday.

Austrian suppliers tremble for their orders>
The problems at Germany's largest vehicle manufacturer are also affecting domestic companies. 900 companies produce for the automotive industry. Voest, ZKW and Miba, for example, count the Volkswagen Group among their customers. 300 companies in Austria are even pure vehicle suppliers. Over 200,000 people work in this sector.

With an export share of 65 percent, Germany is by far the most important market for automotive companies. The fact that sales figures are falling is already having a direct impact. "60 percent deliver directly to the major manufacturers," says Clemens Zinkl from the supplier industry (WKO). Domestic companies are relatively high up in the chain. They are sitting on stock, resulting in liquidity problems. Some manufacturers do not call off orders at all.

Thousands of jobs are also at stake in Austria
The fear is that a contraction of the European automotive industry will cost suppliers orders and also jeopardize thousands of jobs here in Austria. The metalworking industry is already cutting around 8,000 jobs this year, many of them at automotive suppliers. If the automotive industry moves away from Europe, it is to be feared that suppliers elsewhere will also receive orders.