In the 87 years of history, the automobile makers have decided to close their plants for the very First time, in Germany due to the rising competition from the Asian competitors.
Volkswagen has said that they would consider closing their plants for automobiles in Germany and along With that they will ensure 10 years of job security for the workers to ensure financial stability to their workers. They made this decision as the company is facing problems in profit making due to the increasing competition from Asians. And this situation is so critical that it cannot be solved just by cost-cutting measures but the company had to make decisions on plant closures. They had already undertaken the cost-cutting measure but didn’t see any profit after that.
Rise of competition in Asia: Germany was a prime location for automobile manufacturing but now it’s falling due to a sharp rise in competition from Asians and all the companies must act wisely to deal with this. Volkswagen had also faced a problem in the decrease in its vehicle demand in Europe especially in the case of electric vehicles. Due to the affordability and accessibility of other companies’ electric vehicles which causes a fall in Volkswagen Electric vehicle sales in Europe.
The closure of the German automobile-making plant will be the first closure by the company. Half of the total workers of the Volkswagen Company around the globe are in Germany only. Closing the automobile plant in Germany would be a very big step For the company.
A union leader and head of the Volkswagen Workers Council, Daniel Cavallo Said that the reason for failing to tackle this competition from Asians is company management only. As they need to focus on management rather than using cost-cutting and job-cutting measures.
The company needs to act decisively in this case as due to rising competition from Asian competitors; and the availability of affordable electric vehicles around the globe; the company is in a vulnerable condition.
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