Volkswagen to close factories, axe jobs and cut pay, union says

The German carmaker Volkswagen is planning to shut at least three factories in its home country, lay off thousands of workers and cut pay by 10%, according to its union.

- Deborah Cole Berlin Jasper Jolly

The deeper than expected cuts come as the company faces weak sales and slow expansion in the electric vehicle sector amid tough competition from Chinese manufacturers.

"The board wants to close at least three factories in Germany," the works council chief, Daniela Cavallo, told employees at VW's headquarters in Wolfsburg yesterday. Its remaining manufacturing sites will reduce capacity, she said, citing information provided by management.

As Europe's top economy suffers a crisis in manufacturing and fears of mass unemployment, VW is aiming for a fundamental restructuring to cut costs. It warned last month that it had the equivalent of two factories of extra capacity in Germany.