Blog: Volkswagen to bite the bullet on Germany costs?
Dave Leggett | 5 September 2005
So Volkswagen is finally planning to cut labour costs at Wolfsburg is it? Well, I guess the political ground has shifted a bit, with a growing realisation within the firm (helped by the arrival of Wolfgang Bernhard), within the state of Lower-Saxony and even within the labour unions that something has to give. There are well-educated workers who are very much cheaper than Germans in not-very-far-away central Europe. It's not quite as simple as just comparing wage rates, but Volkswagen has appeared to be operating on a strange balance with way too much activity in high-cost Germany for many years.
And there's been a culture within Volkswagen of trying to cover that up as much as possible. Exasperated investment bankers have pointed that out to me on numerous occasions.
The details of VW job cuts in Germany have still to be revealed and the reaction to them will be telling. A bit of caution is perhaps in order for now.
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