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Volkswagen
cuts plan sends shock through the ‘Detroit of east Germany’
In the city
of Zwickau, which has a proud history in the country’s mighty automobile
industry, there are fears about the economic and political fallout
Deborah Cole
Deborah Cole
in Zwickau
Sun 3 Nov
2024 01.00 EDT
Zwickau
gained its nickname as the Detroit of east Germany thanks to the picturesque
city’s pioneering role in the country’s mighty automobile industry, which is
now facing a mortal threat from downsizing at Volkswagen.
Like the
Michigan metropolis, the city’s centre is marred by beautiful but abandoned old
buildings bearing glum witness to the sector’s boom-and-bust cycles. The ornate
art nouveau facades of the historic town centre, now filled with discount
bakery chains and doner kebab shops, whisper of a glamorous bygone era of
endless expansion.
“Just like
whole regions of Great Britain were shaped by coal mining – here it is the
strong connection to the automobile,” says Randy Kämpf, curator at the local
museum tracing the 120-year history of Zwickau as the region’s motor city. “If
in the end the jobs are no longer there, then something huge is lost, also
culturally.”
The
exhibition traces the area’s turbulent entwinement with automotive
manufacturing – from the birth of the Audi via the production of Nazi tanks
using forced labourers, through the creation of the cult communist-era
two-stroke Trabant and the arrival of sleek VW assembly lines turning out Golfs
after the Berlin Wall fell 35 years ago this month.
Zwickau,
west of Dresden on the Czech border, became home in 2020 to VW’s first plant
dedicated entirely to producing electric vehicles. A source of strong local
pride, it was also a €1.2bn (£1bn) roll of the dice that may sour dramatically
if the gamble, as now feared, fails to pay off.
Slack EV
sales were among the key reasons cited last week by Volkswagen – Europe’s
number one carmaker and Germany’s biggest employer – for its decision to embark
on a brutal cost-cutting drive.
For the
first time in the 87 years since it was founded under the Nazis to produce an
affordable “people’s car”, VW intends to close at least three factories in its
home country and axe tens of thousands of jobs. Union leaders have threatened a
“hot winter” of strikes from December.
The company
has declined to say which plants could be on the chopping block, but Zwickau is
frequently mentioned, given its size and inextricable links with the
underperforming electromobility division.
Russian-born
innkeeper Galina Kästner, 48, who moved to Germany as a teenager, says her
guesthouse has welcomed many temporary workers during the plant’s
transformation. She says a closure would “destroy the mood” in town, forcing
the closure of countless restaurants, stores and hotels, describing VW’s
tribulations as “a sad story in general for Germany”.
City mayor
Constance Arndt says she and leaders in other affected communities are talking
to Volkswagen’s management, and she is making the case to keep the Zwickau
plant running.
“VW has said
e-mobility is the future,” says Arndt, whose official car since 2021 has been a
fully electric Volkswagen ID.4. “If that strategy is to succeed, the company
needs the most modern plant of its kind. Plus the employees have shown that
they can handle transformation and make good products.”
After a
15-minute drive north to the Mosel district, twin white smokestacks loom into
view above the familiar blue VW logo on the main production facility, by far
the largest of the three Saxony plants. The state-of-the-art site boasts a
concentration of EV charging stations in the staff parking lots unseen even in
Germany’s urban centres. Solar panels gleam from the roofs in the autumn
sunshine as giant wind turbines cast long shadows over the factory grounds.
Nearly
10,000 people work here, and for each of them, three to four others work in
components jobs in the region dependent on the site. All now have at least some
cause for concern about their future, labour representatives say.
Just days
before, as the shock news from the company’s headquarters struck, thousands of
workers massed at the factory gate, blowing whistles to vent their anger and
rally support for each other while bringing the assembly line to a halt.
Foreman Robby Teller, who manages a team of 10 men and four women, called the
spontaneous demonstration “beautiful”.
Teller, 50,
has built his life around VW. Starting as an apprentice in 1994, he has enjoyed
the fruits of steady employment in manufacturing, Germany’s vital but ailing
industrial backbone – buying a house, starting a family and later seeing his
son follow in his footsteps at the plant.
“I’ve worked
here for nearly 30 years and thought I’d ride it out to retirement,” he says.
“At my age, how am I supposed to seek a new direction in the job market? And
where?”
Regardless
of how it plays out for Zwickau, Teller is angry that the bombshell is going to
detonate somewhere in Germany’s VW network, leaving a trail of devastation
behind it. “We see ourselves as one big family – you don’t wish that on
anyone.”
His parents
are “worried sick” about his family’s future but Teller says he is sleeping OK,
resigned that “there’s nothing I can do” to avert what unions have called a
potential “tsunami” in Zwickau. But other employees approached on the factory
grounds are less composed, becoming tearful when asked how they see their
future with VW.
Some suspect
that management’s silence on where the axe may fall is a tactic designed to
spread terror through the workforce, yielding bigger concessions. Others
compare the creeping sense of abandonment with the economic shock after
national reunification in 1990, which triggered waves of deindustrialisation
and a mass exodus of easterners to the richer west.
Zwickau’s
population reached its apex of 140,000 under communism, but now numbers just
87,000. Unemployment is 5.5%, on par with the national rate but slightly below
the Saxony state average.
Volkswagen,
which is still profitable but suffering from shrinking margins, has insisted
negotiations with labour representatives are continuing.
Deputy works
council chief Kristin Oder predicts tough negotiations under Germany’s
time-honoured system of co-determination, in which employees and executives
make key decisions based on compromise. But Oder argues workers should not bear
the brunt of catastrophic mistakes by the management.
“It feels
like we’re being made to choose between the plague and cholera,” the
31-year-old says. “Either a plant closes or we have to accept massive
sacrifices for the workforce in the area of pay that would cut to the bone.”
Either a
plant closes or we have to accept massive sacrifices for the workforce in the
area of pay that would cut to the bone
Kristin
Oder, deputy works council chief
In 2023, VW
let hundreds of temporary contracts run out while pledging to preserve
permanent jobs. The same year Zwickau turned out about 247,000 EVs, far below
the plant’s capacity of more than 300,000 vehicles a year. The site’s problems
are symptomatic of Germany’s crucial car industry as a whole.
The
country’s chancellor, Social Democrat Olaf Scholz, surprised many by coming to
power in 2021, riding on a pledge of “respect” for hard-working Germans. But
his fractious government is struggling to respond to a crisis that has made
Europe’s top economy the worst performers among industrialised nations.
At the start
of the year, Berlin cut EV subsidies to address budget shortfalls, hobbling the
domestic market and giving a boon to cheaper Chinese models even before the EU
imposed extra tariffs on imports, touching off a potential trade war with
China.
Meanwhile,
the far-right Alternative für Deutschland (AfD) has successfully seized on the
internal combustion engine as a touchstone of prosperity being sacrificed on
the altar of Green-voting urban elites.
The AfD
triumphed in local elections in June and came in a very close second in the
Saxony state poll in September. Its influence ripples through VW, labour
representatives say, and the wider culture in Zwickau, as when the fourth
annual LGBT Pride parade was held in August and drew hundreds of right-wing
extremist counter-protesters. Nearly 500 police officers were needed to keep
the peace, making national headlines.
Kämpf, who
grew up in the region, says he fears a “rise of the political extremes” if VW
no longer provides an anchor in a community that has seen its share of upheaval
over the last century.
But he adds
that the history of Zwickau and other regions rocked by industrial revolutions
also offer countless examples of openness to change and resilience. “Whatever
may come, we will manage,” he says. “I am sure of it.”
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