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Published: Tue, November 22, 2016
Economy | By Melissa Porter

Volkswagen to cut 30000 jobs in historic shake-up

Volkswagen to cut 30000 jobs in historic shake-up

The company announced a sweeping restructuiring plan Thursday, with a concentration of building electric vehicles in Germany and up to 30,000 job cuts worldwide.

That said, Volkswagen in the same announcement also said it would create 9000 new jobs in its battery and mobility services factories in Germany as the brand moves towards an electric future.

The company expects this plan to result in $3.9 billion in annual savings and lift their brand's operating margin to 4 percent by 2020.

WOLFSBURG, Germany Volkswagen (VOWG_p.DE) and its powerful labor unions agreed to cut 30,000 jobs at the core VW brand in exchange for avoiding forced redundancies in Germany until 2025, a compromise which leaves the carmaker's profitability still lagging rivals.

Last month it agreed a $14.7 billion settlement with authorities in the United States that includes compensation for almost half a million owners of the affected cars. This is following a scandal about vehicles being rigged, so that they would cheat the diesel emissions test.

The vehicle giant, which employs 624,000 people in 34 countries, said that the 30,000 job cuts include 23,000 in Germany, but will create 9,000 new jobs as it shifts to electric and self-drive technology.

The fallout from Volkswagen IG's (VLKAY) emission scandal continues as the German auto maker is set to cut 30,000 jobs.

Volkswagen employs more than 610,000 workers worldwide.

The cuts will be through early retirement and natural attribution, according to the deal with the labor unions.

Herber Diess, head of the core Volkswagen brand, said that Volkswagen had let its costs rise and "lost ground in terms of productivity".

The automaker is also building battery packs to be used for its hybrid and electric cars at its Braunschweig plant.

It also must find billions of new euros to pay for fines as well as settlements that stem from its cheating scandal related to emissions and fund its strategic shift over to self-drive and electric cars.

There has been no deal for Canadian Volkswagen owners as of yet.

Bernd Osterloh, a senior employee representative, welcomed the fact that "the next generation of electric vehicles will be made here in Germany, not abroad". At 1324 GMT, the stock was still trading up 0.8 percent at 118.5 euros.

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