BERLIN, Aug 29 - With the supervisory board of Volkswagen AG scheduled to meet on September 4, Lower Saxony state Premier Olaf Lies said there is mounting pressure on all parties to reach agreement on the company’s proposed restructuring within the coming days.
Lies described a narrow window to reconcile the differing positions among VW’s management, trade unions and the German state, which is the automaker’s second-largest shareholder and holds an effective blocking minority. "I strongly urge that we use the time remaining until the next meeting to bring the different positions together," he told journalists on Friday.
He framed the talks as urgent because of the business headwinds confronting Volkswagen. The company has struggled amid costly tariffs, falling demand and mounting competition from China, challenges that executives say require rapid action. At the same time, Lies emphasized that VW’s role extends beyond corporate balance sheets and must be judged against broader social and economic responsibilities. "With its sites in Lower Saxony and across Germany, its tens of thousands of employees and their families, and its suppliers and service providers, Volkswagen also bears an enormous responsibility for the wider economy and society," he said.
At the center of the dispute is a radical cost-cutting package proposed by VW Chief Executive Oliver Blume. Management is seeking to increase planned job reductions to as many as 50,000, with the possibility of closing plants and spinning off parts of the business as it aims to sharply reduce costs across the group. That agenda has prompted strong resistance from unions and deep concern from Lower Saxony officials.
The two sides are reported to be negotiating toward a compromise that will likely focus on the scale of workforce reductions and the future of factories considered at risk, according to people familiar with the discussions. Lies said the outcome must balance economic prudence with social responsibility. "I am convinced that we must find a viable solution here," he said, adding that "and the solution we are now seeking should be measured against that standard."
Before the supervisory board convenes, VW’s executive committee - which includes the company’s works council chief, representatives of the Porsche and Piech shareholder families, and Lower Saxony’s premier - is set to meet on Thursday, a day ahead of the supervisory board meeting, to assess progress in the talks.
Key points
- VW’s supervisory board will review a turnaround plan on September 4 that could involve up to 50,000 job cuts and potential factory closures.
- Negotiations involve company management, unions and the German state, which holds an effective blocking minority and is pressing for a socially responsible outcome.
- The outcome will have implications for the automotive sector, regional economies in Germany, and the network of suppliers and service providers tied to VW facilities.
Risks and uncertainties
- Scale of job reductions - Tens of thousands of additional layoffs are under consideration, posing risks to workers and local economies.
- Factory closures and divestitures - Potential plant shutdowns and spin-offs could disrupt regional industrial activity and supply chains.
- Negotiation impasse - Continued disagreement among management, unions and the state could delay decisions and prolong uncertainty for employees and suppliers.