The Volkswagen Group is planning a severe cut in its production network and may close the factory in Brussels. As VW announced on Tuesday evening, the Audi subsidiary is to develop “solutions for restructuring the location” with the responsible partners in Belgium. At the end of the process there could be “the cessation of operations”. Audi employs around 3,000 people at the plant, who produce the Q8 e-tron electric city off-road vehicle. Due to the weak demand for electric cars and the general overcapacity in VW’s production network, the location has been in jeopardy for some time. On Tuesday evening, the works council called for the factory to be preserved. What is needed is “a future-proof perspective for the plant and our colleagues in Brussels,” said the employee representatives. The possible closure of the site has financial consequences for the VW Group. Together with other costs, such as severance payments for the savings program in other parts of the group, there would be additional costs of 2.6 billion euros, according to a mandatory statement. The operating return on sales in the group will therefore miss the targeted corridor of between 7 and 7.5 percent in the current year. Instead, a target of between 6.5 and 7 percent now applies. As VW had already announced, the group is planning around 900 million euros for termination agreements in order to reduce the workforce of the low-profit parent brand VW. In addition, there would now be further costs for the planned closure of the gas turbine plant of the VW subsidiary MAN Energy Solutions and exchange rate losses in connection with the exit from the Russian business. The trigger for the possible closure of the plant in Brussels is the board’s consideration of the end of production preferable to the electric Audi Q8. According to a press release from Audi, “a decline in customer orders in the electric luxury class segment is being observed worldwide.” The Q8 e-tron is the only model built in Brussels. In 2016, a three-digit million sum was invested in the Belgian location to advance electrification. But the model has recently been selling worse and worse, so that the underutilization of the location has become ever greater. Plant closures are tricky The question of what could happen next in Brussels has been on the board of directors and employee representatives for months. One thing is clear: the loss of production of the large Audi electric model cannot currently be compensated for. This makes it more likely that the factory will be closed, which would be the first in Audi’s company history. Officially it says that the board is starting the “information and consultation process in accordance with Belgian law”. According to management, there is no final decision yet. The employee representatives are not yet openly threatening a labor dispute. However, employee representatives have already pointed out that extensive legal regulations have been in force in Belgium since the late 1990s should a production site in the country be in jeopardy. These would give employees “numerous design options” to avert a closure or at least mitigate the consequences. All alternatives must therefore be “examined in detail and all information needs of the employees must be satisfied”. The background to the regulations is the confusion surrounding the closure of the Renault factory in Vilvoorde in 1997. Since the disputes at that time, some of the regulations in the country have also been called the “Renault law”. Savings program for core brands VW and Audi in the Wolfsburg VW Group Plant closures due to the VW law are very sensitive. This de facto gives the employee representatives on the supervisory board a right of veto when it comes to interventions in the production network. However, the weak demand in Europe for electric cars has long been causing increasing pressure at practically all locations. VW has just decided not to extend the contracts of another 1,000 temporary employees at the electric car factory in Zwickau in order to reduce labor costs. A savings program has started in the core VW brand that is intended to reduce costs by 10 billion euros by 2026. Audi should also significantly reduce costs in order to improve the recently reduced return.More on the subjectWorks council circles say that the difficult situation in Brussels has long been an issue beyond Audi. At the meeting of the VW global works council a few days ago, the works councils presented the board with a declaration of solidarity. Audi management announced on Tuesday evening that the company management wanted to “discuss solutions for employees and the location together with the responsible social partners and intensively examine alternatives.” The last closure of a plant in the VW Group with large-scale layoffs was some time ago. In 1988, after long discussions, VW closed the Westmoreland plant in the United States.
Go to Source