German carmaker Volkswagen is weighing a dramatic move in attempts to improve its finances and cut costs. The company announced on Monday that it will consider closing at least one factory in its native country.
According to Volkswagen’s statement, this would be crucial in restructuring its business and positioning the company better for the future. Another move that is being considered is ending the “job security” program that is in place since 1994.
These would be unprecedented moves in Volkswagen’s history, and their prospects have already drawn harsh criticism from the trade unions. They branded the move as “short-sighted” and “extremely dangerous” while stating they intend to fight with all available measures.
On the other hand, Volkswagen Group CEO Oliver Blume said the current situation at the company is “extremely tense and cannot be resolved through simple cost-cutting measure.”
“The European automotive industry is in a very demanding and serious situation,” Blume said in a statement. “The economic environment became even tougher, and new competitors are entering the European market. In addition, Germany in particular as a manufacturing location is falling further behind in terms of competitiveness.”
Once a European automotive giant, Volkswagen has found itself in a tough situation in the past couple of years. It is facing heightening competition in its stronghold markets like Europe and China while also trying to navigate the weakening German economy. In the most recent quarter, Volkswagen saw a 7.4% drop in sales in China, although it recorded strong growth in Latin America.