Volkswagen cuts 50,000 more jobs

**Bisi Adebayo** (0:01)
Another 50,000 jobs are going, as VW embarks on the biggest restructuring in its history, its World Business Express from the BBC World Service, I am Bisi Adebayo. Also, Kenya tells Tata Chemicals to pack up and leave, and Microsoft puts time limits on its Xbox Cloud service.
The board of German car giant Volkswagen has approved another 50,000 job cards as part of the biggest restructuring in the group's history. It means VW now plans to share 100,000 jobs by 2030, and it's also considering the future of four of its German plans. Workers at VW's headquarters in Wolfsburg have been reacting to the news.

**SPEAKER_2** (0:50)
Well, the future is in danger for all of us here, so it's just difficult to say how long we can stay here.
And, well, we're all just trying to fight for it. We actually want to keep our jobs. We want to continue living securely in Germany with our families.

**SPEAKER_3** (1:07)
Of course, at first glance, I don't think it's very nice, but I believe that people will eventually find their place in other fields, so it won't be the case that people are simply let go from here. Instead, they'll find new jobs.

**Bisi Adebayo** (1:21)
Richard Schiem is director at the Centre for Automotive Research in Duisburg, Germany. I asked her what's behind the decision.

**SPEAKER_4** (1:28)
It is on too much capacity.
It is as well to stay competitive in a global, very, very competitive market, especially against the light of the Chinese competition. And of course, after the last two years, where Mr. Trump evicted more tariffs, so the overall cost situation got worse. And this is why they had to move now.

**Bisi Adebayo** (1:49)
And what about profitability?

**SPEAKER_4** (1:51)
Profitability overall is not bad. I mean, we are not talking about a company going bankrupt, not at all. But to keep up the profitability, to have sufficient funds for investment into the future, this is actually the point. So they will increase further, but at the current point of time, I think there are around 4% a little bit below, which is still OK in comparison to the Chinese as well. So, but it is necessary to have more budget to be prepped for the future.

**Bisi Adebayo** (2:19)
Now, four German plants are still potentially at risk. So how significant would factory closures be for VW and for Germany's wider car industry?

**SPEAKER_4** (2:29)
It might be necessary to close one or two, depending on how large they are and which products they provide or could provide for the future. But overall, it is the... They are trying not to close them because it would be a tough sign for overall German economy and of course for the society and especially the areas where those factories are in a quite weak structure. So Volkswagen very often is the main provider for jobs.

**Bisi Adebayo** (2:58)
But will cutting jobs and reducing costs be enough though? Or are there other things that VW could actually do to become more competitive again?

**SPEAKER_4** (3:08)
I mean, they are very competitive. It is just more obviously in Europe, they are more competitive against the Chinese than the Chinese themselves. In China, it's a different picture. So they need, overall, all the manufacturers need to comply with the regional requirements on product and need to become overall faster. I'm not saying that there is the gold in China's bait because it is not, but it is to be efficient overall at providing the right product for the right market.

**Bisi Adebayo** (3:37)
Matrix came from the Center for Automotive Research. Well, let's bring in Randeep Samell, who is the Fund Manager at M&G Investments, to look at the numbers there now.
Randeep, VW's shares are up today. Why are markets responding so positively to these job cards?

**Randeep Samell** (3:53)
Yeah, I mean, the restructuring has seen a two and a half percent rise in its share price. But let's keep it into context. The shares are still down 22 percent this year for the reasons discussed around competition. The reason the shares are positive is that the whole board has agreed to these job losses, both the Union Council and the Works Council, which sit on VW's board. So there isn't going to be a standoff. And the market has reacted positively to that. But we need to keep it into context. This business needs to become more efficient. Volkswagen manufactures nine million cars with 630,000 employees.
Toyota can do 11 million with just 380,000 employees. That's why it's important.

**Bisi Adebayo** (4:31)
Now let's talk about DataAl today, which shows the US economy added 162,000 jobs in August, beating Wall Street expectations. So how does this affect the crucial Federal Reserve vote on interest rates later this month?