Crain News Service report
DETROIT – Volkswagen A.G.'s North American operations will be spared from most of the 7,000 job cuts being made outside of Germany as part of a massive cost-saving effort, but units in Latin America won't be so lucky.
Volkswagen said in late November that it would eliminate 30,000 jobs worldwide as part of an effort to rebound financially from a scandal in which the auto maker rigged emissions devices on its vehicles to evade air quality standards.
About 23,000 of the job cuts will occur in Germany, with most of the rest coming from Argentina, Brazil and North America, the company said.
Volkswagen of America spokeswoman Jeannine Ginivan said that while it was unclear how many North American jobs have been impacted, she was told that “the majority” of non-German job cuts will occur in South America.
The company expects to save 3.7 billion euros ($3.92 billion) in expenses as a result of the cuts. The headcount reduction, which amounts to 5 percent of the company's work force, will come through early retirement and not replacing workers. VW agreed to refrain from forced layoffs until 2025. “This is a big step forward, maybe the biggest in the company's history,” VW brand chief Herbert Diess said.
The cuts are part of an effort that includes investments at two of VW's German plants to build electric cars.
The labor agreement is critical to the company's bid to accelerate restructuring at its biggest unit and emerge from the worst crisis in its history. The VW brand, which accounts for almost half of the group's sales, was struggling even before the emissions crisis erupted last year, tarnishing the car maker's reputation and burdening the company with at least 18.2 billion euros ($19.27 billion) in costs for fines and repairs.
Reporter John Irwin, as well as Reuters and Bloomberg, contributed to this report, which appeared in Automotive News, a Detroit-based sister publication of Tire Business.