Union backs VW shake-up
Volkswagen pushes ahead the group’s biggest ever restructuring, with 100,000 jobs to be shed worldwide. Lower Saxony’s SPD-led state government and the IG Metall union accept downsizing and lay-offs.
WOLFSBURG (our own report) – The troubled Volkswagen Group is pushing ahead with the biggest corporate restructuring in its history. The radical shake-up of the automotive giant, bringing huge job losses, has been greenlighted by the Lower Saxony state government and the company’s main trade union, IG Metall. The group’s supervisory board unanimously agreed in early September to move forward with tough cost-cutting measures. Prior to this understanding on restructuring there had been public speculation about the Porsche and Piëch owner families entering into a power struggle with the state of Lower Saxony and workforce representatives. Group CEO Oliver Blume wants to slash the global range of models, reduce production capacities by around one million vehicles, and shed up to 100,000 jobs worldwide. The aim is to secure an operating profit margin of nine per cent, a figure that stood at just 3.8 per cent in the first half of 2026. The target now is to make savings of around 30.9 billion euros by 2030. However, inside the VW Group, management is already modelling an even tougher scenario that could require savings of more than 40 billion euros. The future of several German plants remains uncertain. The defence industry has now emerged as a potential alternative to automobile production. In Osnabruck, for example, VW is set on a future of producing arms in partnership with the Israeli defence firm Rafael. Hoping to rescue jobs, the IG Metall trade union welcomes the plans.
Fewer cars, higher profits
Volkswagen CEO Oliver Blume wants to undertake the biggest restructuring programme in the company’s history. As set out in the management’s ‘Future Plan 2030’, the range of models is to be halved, production capacity reduced by around one million vehicles and up to 100,000 workers shed worldwide. And, for the first time, VW is considering importing models currently produced exclusively for the Chinese market into Europe, with a longer-term plan to have them manufactured in Europe as well. This aligns with other European manufacturers who are seeking closer cooperation with Chinese companies.[1] With its drastic downsizing, VW is pursuing an ambitious goal: by 2030, the Group aims to be selling around nine million vehicles worldwide while achieving an operating return on sales of nine per cent – in other words, a nine euros operating profit for every 100 euros of turnover. In the first six months of 2026, the group’s profit margin was just 3.8 per cent.[2]
Outmanoeuvred by an escalation playbook
In late August, staff meetings took place at a number of the Volkswagen Group’s major production sites. Oliver Blume embarked on a tour of several plants, arriving fittingly in the group’s own private jet. On the tarmac in Emden, trade unionists gathered to protest against his downsizing and layoff plans.[3] Volkswagen’s supervisory board came together at the beginning of September. A fierce dispute had been staged in the media in the run-up to the meeting, with the employee representatives on the Works Council appearing to reject management plans. It was reported that three different draft resolutions were on the table, which would contrast with the normal procedure in which a general consensus is ensured from the outset. At that point in time, it was speculated that the dispute could escalate and lead to an extraordinary general meeting. Insiders were reporting that the Porsche and Piëch shareholder families, who have long been pushing for harsher cost-saving measures, were threatening a top-level showdown. The owners were also threatening to restructure the group in order to curb the influence of the Lower Saxony government, which holds 20 per cent of the voting rights in the Volkswagen Group. The owner families were, it was being said, keen to weaken this political influence over the core VW brand that flows from codetermination rights. Their threat was reportedly also that this brand, along with the group’s Audi and Škoda brands, could be spun off from the Wolfsburg-based holding company and run as independent subsidiaries. The bosses were also warning of a similar move for VW’s components division.[4] The threat of an extraordinary general meeting to carve up the company has been seen as a manoeuvre to partially circumvent the veto power held by the Lower Saxony government, which has a 20 per cent stake, legally secured under the VW Act.[5]
Closing ranks behind massive job cuts
Matters came to a head in Wolfsburg on 3 September. First, a meeting of the executive committee of Volkswagen’s supervisory board was convened, bringing together the key players, including Supervisory Board Chairman Hans Dieter Pötsch, Lower Saxony’s Minister-President Olaf Lies (SPD) and Works Council Chair Daniela Cavallo. On the same day, the entire supervisory body, comprising twenty representatives from the workforce and management, was arranged at short notice. Insiders described the rushed meeting as “brought forward”. Straight afterwards, the media reported that a “unanimous” agreement had been reached in Wolfsburg. Employee representatives claimed IG Metall and the Lower Saxony government had “prevented a dangerous escalation of the conflict and paved the way for viable solutions.” Olaf Lies, Lower Saxony’s Minister-President, described the decision as a “sustainable concept”.[6] Oliver Blume spoke of a “strong signal for the future”. Yet it remains to be seen what will happen to the German plants at Emden, Hanover, Zwickau and Neckarsulm. VW stated that, at present, “no competitive follow-up production phase-in can be guaranteed from 2031 to 2034”. For this reason, the group was examining, “in a parallel and addition initiative, alternative uses” for the factories.[7]
The new use: arms production
The workforce in Osnabruck has been able to observe for some time now what the group means by “alternative uses”. Employees report that men dressed in military clothing have been seen on the factory premises for months. During a visit to the factory, Olaf Lies (SPD) talked up the perspective of working in the “defence sector”. The plant could, he said, play a part in making Germany and Europe “defence-capable”.[8] The state of Lower Saxony and the Aurelius investment group intend to take over the site and transition it into a base for producing components for air defence systems, operating in collaboration with the Israeli company Rafael Advanced Defense Systems. The IG Metall trade union has welcomed this move, describing it as an “important milestone” for the production site. In securing an alternative use, it said, “The workforce has been working flat out towards this over the past two years.”[9]
Another round of cost-cutting looms
To achieve Blume’s nine per cent target by 2030, the VW Group aims to save 30.9 billion euros on the basis of nine million vehicles sold. By the end of August, only 15.4 billion euros, half the target saving, had been achieved through belt-tightening measures. Even factoring in the planned cuts to investment and development costs, only 57 per cent of the savings had been covered.[10] There is uneasiness within the Group that the new cost-saving plan will still fall short. Group CEO Blume and CFO Arno Antlitz are currently working through a worst-case scenario in which the saving targets would have to be once again significantly raised. Should VW sell only around eight million vehicles a year by 2030, savings of more than 40 billion euros would allegedly be required to achieve the target profit margin of nine per cent. Volkswagen estimates that the layoffs planned to date from downsizing will cost up to ten billion euros for severance and social plans. Should the four plants in Emden, Zwickau, Hanover and Neckarsulm also cease car production, a further six billion euros could be added to this figure. So, all in all, the VW Group could be investing 16 billion euros in its radical restructuring programme.[11]
A combative stance
Shortly before the start of the upcoming collective bargaining talks in October, IG Metall is adopting a more combative stance. The union is calling on automotive industry workers across the country to take part in protest actions today, Monday. Shortly before the negotiations between management and workers, Mercedes CEO Ola Källenius spoke out in favour of a 40-hour working week. His idea is for employees to work longer but continue being paid the same rate as for 35 hours. This would amount to a 14 per cent hourly pay cut! The first round of negotiations begins on 7 October. The current collective agreements within the automobile sector are due to expire on 31 October.[12] Under the slogan ‘A future, not a carve up’, IG Metall aims to organise a day of action at over two-hundred locations across Germany and bring more than 100,000 people onto the streets. Some leading trade unionists are proposing that well-performing companies should automatically pay their employees a salary supplement once they exceed a certain profit threshold. But this initiative only masks the fact that the IG Metall leadership is seeking to agree on a very moderate rise in basic pay across the industry as a whole.[13] The union stance is entirely in line with the management’s calls for yet more savings.
[1] See: Zeitenwende in der deutschen Autoindustrie.
[2] Kilian Harmening: Diese Werke, Jobs und Beteiligungen stehen auf der Kippe. handelsblatt.com 11.09.2026.
[3] Christian Müßgens: Wie Blume mit dem VW-Flieger von Werk zu Werk eilt. faz.net 26.08.2026.
[4] Christian Müßgens: Volkswagen droht ein Machtkampf, wie es ihn noch nie im Konzern gab. faz.net 29.08.2026.
[5] Christian Müßgens: Eskaliert der Machtkampf um Volkswagen? faz.net 31.08.2026.
[6] Christian Müßgens: VW einigt sich auf Stellenabbau, Aktie setzt sich an Dax-Spitze. faz.net 04.09.2026.
[7] Simon Hüsgen: Auf dieses Sparpaket hat sich der VW-Aufsichtsrat geeinigt. faz.net 04.09.2026.
[8] Christian Müßgens: Volkswagen macht sich bereit für die Rüstung. faz.net 01.09.2026.
[9] Christian Müßgens: Volkswagen verkauft Werk in Osnabrück – und plant weiteren Rüstungsdeal. faz.net 07.09.2026.
[10] Lazar Backovic: VW-Sanierung könnte 16 Milliarden Euro kosten. handelsblatt.com 10.09.2026.
[11] Lazar Backovic, Roman Tyborski: Noch mehr Spardruck für VW – Worst-Case-Szenario des Konzerns. handelsblatt.com 11.09.2026.
[12] Veronika Kanzler: Diese Werke in Baden-Württemberg beteiligen sich am IG-Metall-Aktionstag. stuttgarter-nachrichten.de 15.09.2026.
[13] Alexander Hagelüken: Mehr Innovation, weniger Modelle. Süddeutsche Zeitung 15.09.2026.
