Volkswagen says expense cuts are urgently needed as its profits decline sharply

BERLIN — Volkswagen said significant expense cuts are urgently needed as it reported a steep decline in third-quarter profits on Wednesday and faced employee representatives angry at the possibility of the automaker’s first plant closures in Germany.

The corporation reported net boost of 1.58 billion euros ($1.7 billion) for the July-September period, a 64% decline from the 4.35 billion euros it earned a year earlier. turnover was only marginally lower, slipping 0.5% to 78.49 billion euros.

The figures came two days after the head of Volkswagen’s works council said management had informed employee representatives that it wants to close at least three plants in Germany. The corporation hasn’t publicly detailed its plans.

Volkswagen said in early September that auto industry headwinds cruel it can’t rule out plant closures in its home country, and must drop a job protection pledge in force since 1994 that would have barred layoffs through 2029.

It cited factors including recent competitors entering European markets and economically stagnant Germany’s deteriorating position as a manufacturing location. European automakers are facing increased competition from inexpensive Chinese electric cars.

The latest results “demonstrate the urgent require for action in a volatile surroundings characterized by intense competition,” chief monetary officer Arno Antlitz said. “This is why we are facing significant and hurtful decisions that we require to make together and to bear together.”

“We’ve not forgotten how to construct great cars, but the costs — specifically in our German operations and factories — are far from being competitive,” Antlitz said. “This is why things cannot continue as they are now.”

Citing the confidentiality of talks with employee representatives, he said he wouldn’t comment specifically on plans or “speculations.”

Also on Wednesday, Volkswagen was holding a second round of talks at its Wolfsburg headquarters with union and employee representatives.

The head of the employee council, Daniela Cavallo, said workers desire to view a “comprehensive schedule for the upcoming,” which needs to involve more than labor and plant costs.

“We expect today that the corporation at least declare its readiness to enter a negotiating procedure with us that has the aim of developing alternatives to plant closures and layoffs,” said Thorsten Gröger, the regional chief of the IG Metall industrial union. That, he added, is “the precondition for us to be able to continue this negotiating procedure.”

Otherwise, he noted that a no-strike obligation under the last wage deal with Volkswagen expires Dec. 1.

Volkswagen has some 120,000 employees in Germany, where it has 10 plants — six of them in the northern state of Lower Saxony, including Wolfsburg.