German automotive giant Volkswagen is weighing a massive restructuring by laying off almost 100,000 jobs globally in the next four to five years.
It also plans on shutting down four of its manufacturing facilities in Germany as the 89-year-old company struggles in the ever-increasing competitive market led by Chinese rivals and mounting economic pressures due to increased import tariffs on cars in the US.
According to reports by German business publication Manager Magazin, the proposed layoff and facility shutdown would roughly affect 15 per cent of Volkswagen's worldwide workforce. Manufacturing facilities that would be axed involve plants in Hanover, Zwickau, Emden, and Audi's Neckarsulm hub.
Members of Volkswagen's supervisory board have been briefed on the plans, which would again be raised in a meeting scheduled for July 9, a Reuters report said.
CEO Oliver Blume is reportedly targeting a reduction of €11 billion in operational and administrative expenses by 2030.
The latest proposal would cause a radical shake-up in Volkswagen's workforce, which presently employs 660,000 people all over the globe, with almost 43 per cent of that workforce based in Germany.
The closure of the four manufacturing sites would alone affect around 45,000 employees, putting the lives of the breadwinners in jeopardy.
The company for the past few years has been losing its stronghold, especially in Asian markets like China, because of the ever-increasing competition from Chinese electric vehicle manufacturers.
It is also grappling with tariffs affecting exports to America. According to company statements cited by CNN, Volkswagen believes its traditional model of producing vehicles in Europe and exporting them globally is becoming increasingly difficult to sustain.
Manager Magazin had also reported that Volkswagen was planning on separating its passenger-car and parts division, leading to a major overhaul that would reduce the spending within the next five years to a marginal €130 billion ($148 billion).
“If such plans are pushed forward, we would prevent them with all our might,” the labour union IG Metall and Volkswagen’s General Works Council said on Friday, as cited by CNN, and after the word got out, Volkswagen’s shares have reached an all-time low.