Post its $14.7 billion emmission scandal settlement gaining clearance last month, Volkswagen is planning to restructure its brand and that involves a humongous amount of job cuts — as one expects. The German automaker has signed an agreement with the worker unions to slash up to 30,000 jobs over the period of next five years, reports WSJ. The company currently houses over 6 lakh employees globally.
After months of turmoil, the company is addressing issues of over-staffing and inefficiency at its German headquarters. The restructuring of the automaker’s business is primarily aimed at trying to increase savings at its biggest unit in Germany, coupled along with a plan to boost profitability. These job cuts will help Volkswagen achieve annual saving costs of about $3.9 billion in expenses and enable them to fund its electric, self-driving and other connected mobility initiatives.
For the past six months, Volkswagen, or people’s car, has been working with the labor groups to iron out the specifics of these worforce reductions. The labor groups had been adamant over their decision to not let the company overpower them. They had threathened the automaker to block investment decisions if the company didn’t guarantee to offer job security to nearly half of its global workforce in its home ground.
Volkswagen has sorted out all demands put forth by the labor groups, and has decided to create over 9,000 new jobs at its headquarters. While the automaker will get rid of traditional car workers, it will add talent for the development of its electric car project. This is necessary as the U.S government has penaziled the company and asked them to contribute a chunk of the settlement amount towards research work for sustainable travel methods. This move is expected to increase the brand’s operating margin from 2 percent this year, says Reuters.
With regard to the same, Volkswagen managers have agreed to start work on an electric sport utility vehicle(SUV) at its primary plant in Wolfsburg and another one in Zwickau in east Germany. The parts for this electric automobile will be built across the nation in different factories — electric motors in Kassel and lithium-ion batteries in Salzgitter.
Thus, the German automaker is also gearing up to join the already growing competition in the EV market. Tesla is currently leading the race with its luxirious offerings but Chevy Bolt is trying to play catch up with it. Recently, most traditional and renowned manufacturers have shared their plans of adding to the growth of ecofriendly electric cars in the coming months. Even Jaguar has shown off its concept electric vehicle ‘I-Pace’ at the LA Auto Show, a couple days ago.
