Volkswagen cuts plan sends shock through the ‘Detroit of east Germany’ | Volkswagen (VW) | The Guardian

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

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.

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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.”

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.”