CEO Oliver Blume is anything but satisfied with Volkswagen’s profitability.
In solidarity with his confidant Thomas Schäfer, head of the “Core” brand group, Blume is now freezing the car manufacturer’s workforce.
The hiring freeze will affect the six German locations in Wolfsburg, Hanover, Braunschweig, Salzgitter, Emden and Kassel.
VW is facing a decision of enormous consequence for its core workforce and potential newcomers: the vehicle manufacturer, which is in the midst of a fundamental transformation, will soon decide on a hiring freeze. Business Insider learned this from executive circles at the company headquartered in Wolfsburg.
The background to the drastic measure, which CEO Oliver Blume reportedly did not take lightly, is the generally increasingly difficult business environment in the automotive industry.
The Wolfsburg core brand VW Passenger Cars has therefore already decided to reduce product investments in order to reduce its cost burden. The premium manufacturer Mercedes-Benz is offering discounts of up to 30 percent in the weak new car business. Opel’s former CEO Michael Lohsteller warns urgently: “The automotive industry as a key German industry is in danger.” Business Insider had exclusively reported on each case.
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A spokeswoman for Volkswagen AG confirmed the information upon request: “Due to the ongoing efficiency programs at Volkswagen AG, external hiring is temporarily limited and no external positions are advertised.”
The company spokeswoman also said: “The measure temporarily covers the six locations of Volkswagen AG.” This means Wolfsburg, Hanover, Braunschweig, Salzgitter, Emden and Kassel.
The Saxon locations and the Osnabrück location are not included.
The statement continues: “Applicants who have been scheduled for an interdisciplinary selection process or who have successfully completed it, as well as applicants for whom an offer has been made through recruiting and a contract has been concluded, will continue to be considered as additions. Exceptions for external tenders include, for example, tasks to fulfill legal requirements or mandatory future-proof profiles. These tenders must be examined and decided upon by the committees responsible in the business areas and subsequently reported to the respective executive committees.”
The hiring freeze at VW is likely to fuel internal discussions about future employment policy within the ranks of competitors such as BMW and suppliers such as Bosch and Continental. Even within the VW Group itself, many managers will now have to reflect more closely on what consequences might threaten their brands and companies. Wayne Griffiths, CEO of the Spanish VW subsidiary Seat and its sublabel Cupra, recently predicted in an interview with Business Insider: “There will likely be significant headwinds.”
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VW’s so-called “Core brand group”, which includes Volkswagen Passenger Cars and Seat/Cupra as well as Škoda and VW Commercial Vehicles, recently reported an operating return for the first nine months of this year that was 4.9 percent, slightly above the comparable figure for the same period last year lies.
At the same time, however, “Core” boss Thomas Schäfer made it unmistakably clear: “We are on the right track, but still have a lot of potential – in the brands and as a group. We cannot and must not be satisfied with the current profitability – we must take decisive countermeasures here.”
Schäfer had already announced in the summer that he would reduce costs by ten billion euros with a “performance program”. As the upcoming hiring freeze shows, the top manager does not shy away from rigorous cuts.
According to the 2022 annual report, “the Volkswagen Group, including the Chinese joint ventures, employed an average of 669,275 people (+ 0.2%). On average, 289,499 people were under contract domestically; At 43.3 (44.1)%, their share of the total workforce was below the level of the previous year.
A spokesman for the VW works council led by Daniela Cavallo told Business Insider: “Volkswagen has been taking a restrictive course when it comes to external hiring since the corona pandemic. In view of the recent efficiency efforts, it is understandable that the company is now reducing further job creation through new hires even more to the bare minimum. We see this as an opportunity to advance the key issue of internal transformation in an even more concentrated manner than before. The general works council will continue to closely monitor the question of which open positions can soon be filled with existing employees, as well as the question of possible qualification programs and budgets for this.”