Volkswagen AG (ADR) (OTCMKTS:VLKAY,VLKPY) is planning to lay off 30,000 employees.
The Volkswagen layoffs are part of an agreement with the company’s workers. It will have the automobile company reducing its workforce by 5%. VW expects that this will save it $3.9 billion in expenses.
As part of the agreement, the Volkswagen layoffs won’t be forced on employees until 2025. Instead, VW will work with employees seeking early retirement. It also plans to not fill positions once employees have left them.
The company has also agreed to train employees for new jobs. The change will also give it room to hire more employees with experience in technology. This will have it creating an additional 9,000 jobs.
The talks with labor unions took nine months to complete. The majority of the Volkswagen layoffs will be for the VW brand. However, the company has agreed to build two electric cars at its German factories in Wolfsburg and Zwickau, reports Bloomberg.
The Volkswagen layoffs will include employees across the world, but Germany will be where it hits the hardest. Of the total 30,000 layoffs, 23,000 of them will occur in the country. The 9,000 new jobs being created means that the country will see a net decline of 14,000 jobs for VW workers.
“Volkswagen is far behind competitors,” Mr. Diess Herbert Diess, the Volkswagen AG (ADR) executive in charge of the VW brand, told The New York Times. “Volkswagen has to quickly earn more money and arm itself for the change ahead.”
VLKAY stock and VLKPY stock were down 1% as of Friday afternoon.
