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Business

Volkswagen to cut 30,000 jobs to reduce costs after emissions scandal

© Paul Richards AFP | File photo

Text by NEWS WIRES

Latest update : 2016-11-18

Automaker Volkswagen said Friday it will shed 30,000 jobs to cut costs as it tries to recover from its diesel emissions scandal and invests more in electric-powered vehicles and digital services.

Company officials said at a news conference at headquarters in Wolfsburg, Germany, that 23,000 of the job cuts will come in Germany. It said the measures will save some 3.7 billion euros ($4 billion) a year from 2020.

Volkswagen has agreed to pay $15 billion under a settlement with U.S. authorities and owners of some 500,000 vehicles with software that turned off emissions controls. Around 11 million cars worldwide have the deceptive software. The scandal has been a spur for the company to address problems such as excessively top-down management and excessive fixed costs at its manufacturing locations in Germany.

The company has said it aims to cut nonessential costs and investments and shift investment toward battery-powered cars and services such as car-sharing and ride-sharing.

CEO Matthias Mueller said it was “the biggest reform package in the history of our core brand.” In addition to Volkswagen, the company also makes cars under other brands including Porsche, Audi, SEAT, Skoda and Lamborghini.

Herber Diess, head of the core Volkswagen brand, said that Volkswagen had let its costs rise and “lost ground in terms of productivity.”

Volkswagen Group, with its multiple brands, has more than 600,000 employees but the cuts will mainly fall on its 120,000-strong German work force.

The company cut a deal with its powerful worker representatives under which future investment would be in Germany and the reduction in staff would rely on voluntary departures such as early retirement, with no firings.

Top employee representative Bernd Osterloh said that “the next generation of electric vehicles will be made here in Germany, not abroad.”

Other job cuts are foreseen in Brazil and Argentina.

(AP)

Date created : 2016-11-18

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