Thursday, October 1, 2015

VW Scandal Affecting Employment by Ira Riklis

Customers are not the only people affected by the VW scandal as employees fear for their jobs and the company issues a hiring freeze. Read more of this issue below.

The Fallout

The fallout from the VW scandal continues as the effects are being felt in production plants all over the world. According to USA Today, VW finally surpassed Toyota as the number one auto maker in the world by volume in July 2015. But, by the middle of September, VW had started a tumble from the top that is taking its employees along for the ride. The company faces a scandal that a recall of millions of vehicles may not help resolve, and now it is also starting to make cuts in the personnel department that are affecting employees all over the world.

Hiring Freezes And Shift Reductions

It was recently reported by NBC News that the VW engine plant in Salzgitter, Germany has eliminated what it referred to as a "special shift" that was supposedly put together to meet high demand. In the wake of VW's record-setting pace of production leading up to its unseating of Toyota as the top car maker in the world, it is understandable that the company would add shifts to meet demand.

While it makes sense that any shifts created because of the increase in demand would be eliminated in the wake of the scandal, what is telling is the fact that VW has frozen all hiring until the end of the  year. The company is apparently bracing for a scandal that could include fines of $18 billion in the United States alone.

New CEO To Attack New Problems

In the wake of the scandal, VW has seen some immediate changes such as:
  • The sudden resignation of long-time CEO Martin Winterkorn
  • The ascension of former Porsche CEO Matthias Mueller
  • The news that nearly three million cars in Germany alone could be affected
  • An order from the European Union that all VW vehicles be checked for issues
New CEO Matthias Mueller takes on a company that is hearing negative comments from customers, the United States Environmental Protection Agency and even its own German government.

Will Jobs At Dealerships Be Affected?

As employees working at the German VW production facilities wonder if they will lose their jobs as the company restructures its workforce to accommodate the scandal, some industry observers are wondering how long it will take for dealerships to start laying off technicians and sales people due to the scandal.

According to the IB Times, this sort of scandal may not affect American dealership employment at all. The German diesel market is not as prominent in the United States as it is in other countries, which means that few dealerships will feel a financial pinch due to a drop in VW diesel sales.
However, the Telegraph points out that countries such as India and South Africa have opened up their own investigations into the VW scandal, and German diesel vehicles are very popular in those countries. Dealership employment in those countries could see a significant drop as the scandal continues.

The Future Of VW Employment

This scandal will have long-reaching effects that could cause more jobs to be lost in the future. CNN reports that VW has lost nearly 33 percent of its market share in the short time since the company admitted to fraud earlier in the summer. While the company has not announced any plans for further layoffs at this point, it has said that there could be personnel restructuring plans put into effect at some point.

With VW not giving many details about the future of its employees, it is difficult to speculate on what will happen. But with the company's market share dwindling and its reputation on the rocks, VW employees could be in for a very rough ride.

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