Martin Winterkorn, the chief executive of VW AG, is scheduled to address the staff at a closed meeting at VW’s main plant in Wolfsburg, Germany, according to people with knowledge of the matter.
The purpose of the worker gathering is for Volkswagen’s boss to talk to around 20,000 blue-collar employees about the necessary cost cuts the company aims to implement at the core Volkswagen brand. The planned 5 billion euros ($6.74 billion) a year reductions from 2017 onwards are among the measures envisioned to boost decaying earnings margins.
“Costs are slowly beginning to run out of control,” said Stefan Bratzel, head of the Centre of Automotive think-tank near Cologne. “Inefficiencies are growing, that cannot be entirely avoided at a company as big as VW.”
The move follows a July 14 letter to managers – in which VW’s boss asked them to essentially work harder – as the largest European carmaker, and the second biggest in the world last year has rising sales but diminishing returns from some of its divisions – including the key VW brand.
VW’s CEO needs workers’ support as it aims to further streamline all levels of the VW core business, as the Group has half of the 20 seats on its supervisory board occupied by employee representatives – a force to be reckon with when taking corporate decisions.