Volkswagen CEO Oliver Blume clashed with his workers in a heated meeting as the embattled boss continued his painful struggle to roll out pay cuts and close factories in Germany.
The head of Germany’s largest private employer addressed 20,000 Volkswagen workers at its headquarters in Wolfsburg on Wednesday, but his pleas fell on deaf ears.
Blume is trying to push through aggressive workforce and pay reductions as the carmaker targets €10 billion in cost reductions amid strong competition from China, falling global sales, and rising production costs.
“As management we’re not operating in a fantasy world. We are making decisions in a rapidly changing environment,” Blume told workers, Reuters reported.
Wolfsburg is home to Volkswagen’s biggest factory, which employs around 60,000 workers.
Volkswagen says it needs to take drastic action to cut costs, including a 20% pay reduction and the closure of factories in Germany for the first time in its history.
Blume argued the carmaker needed to sell more cars in China, but labor costs in Germany were too high for it to compete. The carmaker has already scrapped a 30-year labor agreement that safeguarded jobs, paving the way for controversial layoffs.
“The price pressure is immense,” Blume said.
“We therefore urgently need to take measures to secure the future of Volkswagen. Our plans for this are on the table.”
A source told Reuters that Blume’s comments weren’t well received by workers, who interrupted him several times during his conversation by booing. This reportedly included when he described how he grew up in Wolfsburg and that the city was close to his heart.
A representative for Volkswagen declined to comment on private meetings.
Volkswagen employees have been striking as negotiations between management and its works council over cost cuts continue in the background. The union IG Metall said 100,000 Volkswagen employees staged walkouts on Monday.
Fortune 500 companies across Germany have announced a wave of layoffs this year amid a challenging macroeconomic environment that has hit the country’s export-dependent economy. Fortune analysis found these companies had announced more than 60,000 layoffs this year, including fellow German giants Bosch and Thyssenkrupp.
However, Volkswagen, which employed more than 650,000 people at the end of 2023, is having a harder time pushing through job cuts thanks to the power of its works council, which holds seats on the company’s board.
Daniela Cavallo, who heads Volkswagen’s works council, said unions still wanted to strike a deal before Christmas.
“That will mean compromises. Concessions, too. Things that you don’t like and that sometimes hurt you one way or another. But that has to apply to all sides,” she said. “Otherwise it’s not a compromise.”
Talks are set to resume on Monday.
In a statement to Fortune, Blume said: “I am delighted that the Works Council has come up with its own proposal. That shows: We are interested in finding a solution together. The current proposal for codetermination is a starting point, but is unfortunately not nearly enough to defend the future of Volkswagen. We must therefore continue to negotiate and work together on measurable and, above all, sustainable solutions.”
Volkswagen has made use of the demographic curve in recent months, offering early retirement packages and voluntary redundancy options for older workers. However, in order to push through mammoth cost reductions, the company hopes it can strike a deal that will see many more workers lose their jobs.
