On Friday, an announcement was made by Volkswagen that they will be cutting 30,000 jobs throughout the company to restructure the organization and try to maintain integrity in the company’s brand. This is following a scandal about vehicles being rigged, so that they would cheat the diesel emissions test. According to the company, their plan to cut the jobs are for a long-term plan that will shift their investments and resources towards electric vehicles and other digital services.
Volkswagen held a news conference at their headquarters in Wolfsburg, where the company officials announced that 23,000 of the cuts will be jobs that are in Germany. This will save the company approximately $4 billion (3.7 billion euros), annually, starting in 2020. The company’s CEO, Matthias Mueller called this move “the biggest reform package in the history of our core brand.” The company is also the supplier of vehicles for brands, such as Audi, Lamborghini, SEAT, Porsche, and Skoda. This announcement is another blow to a difficult year for the automotive company, which made waves on the emissions scandal. This damaged Volkswagen’s reputation and led to billions of dollars being loss.
Volkswagen made an agreement with the US authorities to pay $15 billion, which would also go to approximately 500,000 vehicle owners that have software that would turn off emissions controls. Worldwide, there are 11 million cars that have the deceptive software. The scandal caused Volkswagen to address other issues that the company has been dealing with for a long period of time, such as the Germany manufacturing locations’ high fixed costs and an excessive top-down management. Many believe that the top-down management is what enabled the emissions scheme. The head of Volkswagen’s brand, Herbert Diess said that the company let their costs rise, which caused them to lose ground in their productivity. Diess believes that the cut will make the company “more efficient”.