VW stops production at German site for first time

"The decision to end vehicle production at the Transparent Factory after over 20 years was not an easy one to make," Volkswagen brand boss Thomas Schaefer said this month. 

"It was, however, absolutely necessary from an economic perspective."

The carmaker has said the site would become a research and development centre focussed on chips, artificial intelligence and robotics, with the Technical University of Dresden expected to eventually occupy about half of it.

"Socially acceptable alternatives" including termination agreements as well transfers to other plants would be on offer to workers there.

Volkswagen, facing a triple whammy of cratering sales in China, a sluggish economy in Europe and the costs of investing into electric cars, a year ago reached a deal with unions to cut 35,000 jobs by 2030 in Germany in a bid to cut costs.

The Volkswagen brand continues to operate some eight production sites in its home country.

Though that deal ruled out compulsory redundancies, IG Metall union official Stefan Ehly told AFP that he thought Volkswagen would have major difficulties ensuring that all employees could keep working at the Dresden site.

"Stopping production was agreed," he said. "But it was also agreed that there would be a plan for the site, guaranteeing employment for all who work there. And that just hasn't happened."

A Volkswagen spokesman told AFP that the 2030 deal ruling out compulsory redundancies still stood and emphasised that the Dresden site was anyway more a distribution and experience centre than a full-scale factory.

"There is nobody who will be left without a job," he said. "But there might be some people for whom we still have to work out what it is that they will do."

The Transparent Factory has made about 6,000 cars a year compared to more than 500,000 at Volkswagen's Wolfsburg plant.

Automotive analyst Pal Skirta of Metzler bank told AFP that further tensions could be looming between Volkswagen and unions since the carmaker was planning to launch several low-cost electric models in coming years.

"With their cost structures it will be challenging to make it profitable," he said. "They may have to reduce costs even further."

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