German automaker Volkswagen will close a plant in Germany for the first time in its 88-year history.
According to the Financial Times (FT) on the 14th local time, Volkswagen will halt production at its Dresden plant starting on the 16th. Since 2002, the small-scale plant has produced about 200,000 vehicles and was created as a showcase to demonstrate the company's technological prowess.
The Dresden plant initially assembled the high-end sedan Phaeton, and after the Phaeton was discontinued in 2016, it produced the ID.3 electric vehicle until recently. The site will be leased to Dresden University of Technology and used as a research campus for robotics development and other purposes.
The plant closure is part of a restructuring agreed to by labor and management last year. At the time, the two sides agreed to cut more than 35,000 jobs in Germany, or about 30% of the company's 120,000 German employees. They also agreed to raise wages by 5% but set aside the increase in a company fund to be used for expense savings.
At the time, management said production was in surplus due to falling demand and held talks with the union after proposing expense-saving measures, including ▲ closing at least three of 10 plants in Germany ▲ workforce cuts accordingly ▲ a uniform 10% wage cut.
Recently, Thomas Schäfer, Volkswagen brand chief executive officer (CEO), said the decision to close the Dresden plant was not made lightly, emphasizing that "it was essential from an economic point of view." Volkswagen Group posted a net loss after tax of €1.07 billion (about 1.9 trillion won) in the third quarter (July–September).
FT said the move is "part of a restructuring as Volkswagen faces cash flow pressure from weak sales in China, soft demand in Europe, and tariff burdens on U.S. sales," adding that "Volkswagen is grappling with how to allocate its five-year investment budget set at a total of €160 billion (about 280 trillion won)."