Volkswagen to close at least three German plants and cut thousands of jobs, union warns
The German carmaker Volkswagen is planning to shut at least three factories in Germany, lay off thousands of workers and cut pay by 10%, the company’s union has revealed.
Daniella Cavallo, the head of Volkswagen’s workers council, told workers at VW’s headquarters in Wolfsburg today that the company is planning even deeper cuts than expected.
This would be the first closure of domestic plants in Volkswagen’s 87-year history.
Cavallo told staff that VW’s management have a “clear intention” to cut tens of thousands of jobs, Reuters reports, to shrink German factories that remain open.
Cavallo said:
Management is absolutely serious about all this. This is not sabre-rattling in the collective bargaining round.
This is the plan of Germany’s largest industrial group to start the sell-off in its home country of Germany.
At the start of September, Volkswagen told staff it was planning to close at least one larger vehicle manufacturing plant and one component factory in Germany.
The company has been struggling to manage the transition away from fossil fuel cars to electric vehicles, where it is facing tough competition from Chinese manufacturers
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German carmaker Volkswagen is planning to shut at least three factories in its home country, lay off thousands of workers and cut pay by 10%, according to the company’s union.
The deeper-than-expected cuts come as the company faces weak sales and slow expansion in the electric vehicle (EV) sector amid tough competition from Chinese manufacturers.
“The board wants to close at least three factories in Germany,” the works council chief, Daniela Cavallo, told employees at VW’s headquarters in Wolfsburg. Its remaining manufacturing sites will reduce capacity, she said, citing information provided by management.
Boeing has announced plans for $19bn of share sales, to shore up its finances amid a costly worker strike and an ongoing crisis about the safety of its aeroplanes.
The oil price has tumbled, on relief that Israel’s attack on Iran last weekend did not hit oil production or nuclear facilities.
Brent crude is now down 5.3% today at $72.06 per barrel.
Ricardo Evangelista, senior analyst at ActivTrades, says:
“WTI oil prices dropped as markets opened after the weekend, hitting their lowest level in over three weeks. This decline comes as tensions in the Middle East appear to ease.”
“Concerns of an all-out war between Israel and Iran had loomed over the region for the past month, with markets bracing for Israel’s potential retaliation following Iran’s missile strike on October 1.”
“However, the response was measured, and for now, the worst fears have subsided. With reduced geopolitical risks to supply, traders have shifted their focus back to market fundamentals, which currently include a demand slowdown—especially from China, the world’s top crude importer—and an upcoming OPEC+ production increase set for December. In this context, the risk to oil prices appears skewed to the downside.”
The budget continues to dominate the economy, with just two days to wait for Rachel Reeves’s fiscal statement.
New data shows that the UK’s Alternative Investment Market (Aim) has shrunk to its smallest size in 23 years as business owners and investors anticipate an abolition of inheritance tax relief.
Pubs and restaurants are warning of closures and a tough Christmas ahead if Rachel Reeves’s budget this week raises taxes and ends a Covid-era relief on business rates.
There are also fears that Reeves could cut funding for nuclear sites including Sellafield.
While bosses are cross that they are losing staff working time because of waits for healthcare or caring duties due to underfunded public service
Meanwhile, the government has announced that the budget will include £240m of funding to help people currently economically inactive to get into work.
While Oxfam has reported that the high carbon emissions of the world’s richest 1% are worsening hunger, poverty and excess deaths.
Volkswagen’s brand chief Thomas Schaefer has warned that the company simply isn’t productive enough, especially with costs increasing.
Schaefer explained (via Reuters):
“We are not earning enough money with our cars currently. At the same time, our costs for energy, materials and personnel have continued to rise. This calculation cannot work in the long term.
“So we have to get to the root of the problem: we are not productive enough at our German sites and our factory costs are currently 25-50% higher than we had planned. This means that individual German plants are twice as expensive as the competition.
“In addition, we at Volkswagen are still processing many tasks internally that the competition has already outsourced more cost effectively. This means that we cannot continue as before.
We must quickly find a joint and sustainable solution for the future of our company.”
Shares in Volkswagen have dropped by over 1% today, after its union said the company plans to shut at least three German plants, axe tens of thousands of jobs and slash pay by 10%.
The City of London is in broad agreement that the Bank of England will cut interest rates next week, but there’s less certainty about December’s meeting.
Reuters has polled 72 economists, and each one predicted the BoE will cut rates by a quarter of one percentage point a week on Thursday, to 4.75%.
It feels like a safe call, as inflation has now fallen below the Bank’s target, and BoE governor Andrew Bailey told the Guardian the Bank could become “a bit more activist” in its approach to cutting interest rates, if inflation stayed low.
Looking beyond the November meeting, around two-thirds of economists predicted the BoE would leave rates on hold in December., while the remainder expect a second quarter-point cut.
Retail sales volumes fell at a modest pace in October, after slight growth last month, according to the latest CBI Distributive Trades Survey.
Worryingly, retailers reported that sales were weak for the time of year.
The survey found that some retailers see consumers holding back on their spending due to uncertainty surrounding the budget on Wednesday.
The latest CBI Distributive Trades Survey found annual retail sales volumes dipping slightly amid elevated consumer uncertainty in October. Retailers expect sales to be broadly flat next month #DTS pic.twitter.com/EVYfVdrIdt
— CBI Economics (@CBI_Economics) October 28, 2024
Retailers reported disappointing sales for the time of year in October, to a greater extent than the previous month. Seasonal sales are expected to remain similarly weak in November #DTS pic.twitter.com/OkWrqCaQf0
— CBI Economics (@CBI_Economics) October 28, 2024
UK green power supplier Good Energy have received a possible takeover offer from Dubai-based Esyasoft Holding.
Good Energy says it is evaluating the “unsolicited indicative, non-binding proposal”.
Its shares have jumped by 25% so far today, raising its market value from £53m to £67m.
News of Esyasoft’s approach came as Good Energy announced its own deal; it has bought solar power installation company Empower for up to £8m.
An official report into UK parcel delivery firms has found that Evri and Yodel are the worst parcel firms at helping their customers.
Ofcom, the UK’s communication regulator, found that Evri, once again, has the lowest levels of satisfaction, with just 32% of customers satisfied with its service, and 39% unhappy.
Yodel wasn’t much better, registering a satisfaction score of 38%.
At the top of the table, though, Amazon (56%) and DHL (55%) were the best performers, followed by FedEx (52%).
Ofcom also reports that customers are slightly more satisfied with the process of contacting the parcel company to discuss an issue, after it strengthened regulations.
The regulator adds:
Parcel operators have made a number of improvements to complaints handling, including better information on their websites; improvements to phone lines and live chat; and introducing options for customers to request an email or call back.
We expect further, sustained and continued improvement. We remain particularly concerned that disabled consumers and those with limiting conditions are still more likely to encounter difficulties with the delivery process (71%) compared to other people (63%).
Boeing launches $19bn share sale
Another troubled company, Boeing, is also making news today.
Boeing has announced it will issue 90 million new shares to bolster its balance sheet. At a current share price of $155, that would raise almost $14bn for the firm whose production is currently stymied by strikes by its workers.
In addition, Boeing will issue $5bn of depositary shares, meaning it will raise a total of $19bn.
Two weeks ago, Boeing said it planned to raise up to $25bn through a stock and debt offering. It has also lined up a $10bn credit agreement with a consortium of banks, to give it more access to liquidity.
Last week, Boeing’s staff rejected their latest pay offer, meaning the industrial action continues….
Budget will include £240m package to help people back into work
Back in the UK, chancellor Rachel Reeves has announced a £240m package to help people back into work.
The cash injection will accelerate the rollout of local services to help people out of economic inactivity.
Get Britain Working “trailblazers” in local areas will bring together and streamline work, health, and skills support to disabled people and those who are long term sick, the Treasury says.
Reeves says:
Due to years of economic neglect, the benefits bill is ballooning. We will build a Britain where people who can work, will work, turning the page on the recent rise in economic inactivity and decline and towards a future where people have good jobs and our benefits bill is under control.
Official data shows that more than 9.2 million people are economically inactive – neither working, nor looking for work – often because of illness, or caring responsibilities.
My colleague Richard Partington wrote last weekend about the efforts to reduce inactivity in Barnsley, one of the areas with the highest rates of economic inactivity: