Job cuts at VW: how should Europe respond?
Volkswagen CEO Oliver Blume has announced that the company will axe up to 50,000 jobs – in addition to the 50,000 already agreed on. The aim is to slash the costs of Europe's largest car manufacturer to a 'competitive level'. Four German plants are reportedly at risk of closure. Commentators debate the implications beyond Germany and what steps to take next.
Wake-up call
The Europeans must defend their economic interests more efficiently, La Libre Belgique demands:
“To protect businesses against dumping, unfair subsidies and distortions of competition is to provide our industries and the free market with the conditions necessary for survival. While some people see an industry in its death throes, the crisis at Volkswagen reminds us that it is simply migrating. Europe believed it could make trade an arena governed by shared rules, whereas the rest of the world has turned it into a contest of power, a matter of industrial sovereignty. The warning signal sent by Volkswagen goes far beyond the fate of a single German car manufacturer – it concerns the role that Europe wants to play in the global economy.”
Some form of protectionism is essential
The crisis should serve as a warning to all Europe, De Volkskrant admonishes:
“Volkswagen is now paying the price for its complacency. Resting on its laurels, the company failed to identify new geopolitical and geo-economic threats such as the growing protectionism of the Chinese and American markets. The crisis at Volkswagen is not only a problem for the company itself, it is also a clear signal that Europe must redefine its relations with China. In a world where China and the US are protecting their industries, Europ will also have to exercise some form of protectionism.”
Who's afraid of "Made in Europe"?
The crisis at VW should galvanise the EU into finally pressing ahead with the Industrial Accelerator Act to promote European technologies and products, The Guardian writes:
“The delay is partly caused by the reservations of countries such as Germany, which has relied heavily on exports and is fearful of the retaliatory response to a robust 'Made in Europe' strategy. Chancellor Friedrich Merz, is emphasising a more economically liberal approach, unveiling a growth package earlier this month dedicated to cutting red tape, diluting workers' rights and raising the retirement age. Those are the wrong priorities. ... Brussels and national EU governments can no longer afford to sit tight and hope that the new, harsher winds in the global economy will blow over.”
Better to focus on factories outside Germany
Český rozhlas sees the closure of VW plants in Germany as the best option:
“That would be an effective move. It would allow the company to focus on developing the remaining, thriving parts of the group, such as Czech manufacturer Škoda, and channel other resources into more promising sectors. A good idea. But the question is whether management and politicians will have the courage to go through with it. Probably not. Consequently, the problems facing German car manufacturers – and the German and Czech industries linked to them – are only likely to get worse.”
Good productivity not enough
The Czech Republic is a cheap manufacturing base for Volkswagen, but Seznam Zprávy worries about economic dependence on the struggling German car manufacturer:
“A large part of Czech industry, and Škoda in particular, depends on Volkswagen for its existence. ... Škoda Auto is one of the most respected employers in the Czech Republic, yet despite its – for Czech standards – unusual wage policy, production costs are significantly lower than at the German VW plants. For example, these plants manufacture Golf models that compete with the Škoda Octavia in terms of price and target market. However, production in Wolfsburg is significantly more expensive, which has a negative impact on the profit per vehicle sold.”
Dependence on car industry will take its toll
The dire crisis at Volkswagen will soon impact the Czech Republic and Slovakia, writes an uneasy Pravda:
“Slovakia's dark fears that production of the Porche Cayenne, the flagship model at the Bratislava plant, would be relocated to Leipzig have not materialised. So for now, residents of the capital as well as Mladá Boleslav [home to the Škoda plant in the Czech Republic] can stay calm. But the cuts will come because the carmaker is struggling. ... For Slovakia this is one thing only: a wake-up call. Our industry and economy must look for alternatives. If we continue to rely solely on cars (we and the Czech Republic produce more cars per capita than any other nation, after all), then catastrophe awaits us. Time is running out.”