Emission Scandal Update: Volkswagen Eliminates 30,000 Jobs

Emission Scandal Update: Volkswagen Eliminates 30,000 Jobs

When Volkswagen executives and engineers decided to mislead regulatory officials with devices that altered the emission results in some of their VW, Audi and Porsche vehicles, it cost their shareholders billions of dollars and the CEO his job. Now, Volkswagen, the largest automaker in Europe and one of the biggest employers in Germany, has announced the reduction of their staff by 5%. That’s 30,000 jobs worldwide. Company officials said that the cuts will be implemented by 2025 and will account for a rise of nearly $4 billion in profits each year in addition to increased production at its factories by up to 25%.

Germany, where the automaker is headquartered, will lose 23,000 of the jobs. Both Brazil and Argentina will be facing cuts that one VW spokesperson described as “brutal.” But the jobs in Germany will be phased out gradually, with some employees being forced into early retirement and other positions being eliminated once they are vacated. This has led Volkswagen to claim that none of their employees will be fired, but the details for the dismissal of positions in South America were not disclosed.

Executives have been negotiating with labor leaders for the past nine months. The talks started soon after the emissions scandal rocked the industry a little over a year ago. Volkswagen has admitted that around 600,000 vehicles were affected by the scandal in the U.S. and 11 million internationally. Labor agreed to the job eliminations only after VW promised to create 9,000 new jobs in technology and launch two new electric automobile lines to be produced in German factories. Herbert Diess, a member of Volkswagen’s Board of Management, believes that these cuts and investments are imperative for the future of the company.

“Volkswagen is far behind competitors,” said Diess. “This is a big step forward, maybe the biggest in the company’s history. All manufacturers must rebuild themselves because of the imminent changes for the industry. We need to brace for the storm.”

Volkswagen Agrees to 14.7 Billion Settlement

This jobs announcement comes just one month after VW agreed to a $14.7 billion settlement over their 2-liter diesel engines sold in the U.S. As part of that agreement VW must spend $2.7 billion to help fight the damage they have done to the environment by cheating emissions standards and fork over another $2 billion towards zero-emission ventures. Volkswagen also announced that they plan on having 30 electric models on the road by 2025 and are expanding investments in ride-sharing and autonomous driving opportunities.

“The VW brand needs a real shake-up,” said Matthias Mueller, the CEO of VW.

But before that “shake-up” happens, several settlements and lawsuits need to be finalized. Negotiations with representatives of the more expensive 3.0 liter engines are still underway along with the convoluted investor and dealership lawsuits. Not to mention the fact that the company and some employees are still under criminal investigation by the Department of Justice and the penalties for violating the Clean Air Act have still not been announced.

“We cannot undo the damage that’s been done to our air quality,” said Sally Yates, the Deputy Attorney General, “but we can offset that damage.”