Big fines, big job losses

If the United States government slaps Europe's largest automaker with an unprecedented fine for disguising the toxic emission of its diesel engines, it could have "dramatic social consequences" for VW employees in the US and Europe, said Bernd Osterloh, who heads up VW's powerful works council.

"We very much hope authorities in the US keep these social and labor-related dimensions in mind," he said.

His remarks came Tuesday as thousands of workers gathered at Volkswagen's headquarters in Wolfsburg, Germany, for an employee meeting that saw four high-ranking executives, including Osterloh, give speeches and talk about the company's plans for cutting costs and streamlining its workforce.

'We can only do this together'

VW CEO Matthias Müller told employees gathered in Wolfsburg it would take years for all of the consequences, financial or otherwise, of the company's deception to become clear.

Volkswagen faces charges in the US of up to $48 billion (53 billion euros) for allegedly violating environmental laws. But how much Volkswagen will ultimately be forced to pay in fines for the malicious software it installed in 11 million of its vehicles is anybody's guess.

"We are going to need patience, persistence and some tolerance for frustration," Müller said, calling for solidarity from the audience. "Despite the different perspectives that naturally exist in a company, one thing is for sure: We can only do this together."

On Monday, Wolfgang Porsche, the chairman of Porsche Automobil Holding SE, the family investment vehicle that holds a majority stake in Volkswagen, said talking about layoffs should no longer be "taboo."

More bad news

Müller's words were echoed by Stephan Weil, the governor of Lower Saxony, where Volkswagen is based, who said he expects more "unpleasant news" this year as the automaker deals with the fallout of its manipulation.

"The damage to VW's bottom line won't be minor. That much can be said today," Weil said.

As the company finds itself in the throes of its deepest-ever crisis, one that has wiped billions off its market value and opened it up to a slew of lawsuits around the world, it also must strike a fine balance between staying competitive and protecting as many jobs as possible.

Volkswagen has already said it doesn't plan on extending the contracts of temporary workers at its production facilities in the cities of Emden and Hanover. Those cuts are part of broader plans to slash 1 billion euros a year in investments in its biggest divisions.

Further details of those plans were presented by VW's brand manager Herbert Diess, but that portion of the meeting was off-limits for journalists.

The blame game

Also on Tuesday, prosecutors in the nearby city of Braunschweig said they were now investigating 17 people for their role in Volkswagen's emissions-cheating scandal, up from six.

Although no current or former board members have been swept up in those inquiries, the latest development did raise the stakes for Volkswagen, which has sought to portray the cheating as the result of the misguided ambition of a handful of low-level engineers.

The furthest Volkswagen's lawyers have gone is to admit that some board members first learned about the scandal two weeks before it went public. But they reject the notion the executives broke any laws by keeping that information secret.

According to a four-page statement published on the automaker's website last week, Volkswagen's former CEO, Martin Winterkorn, may have been informed about the use of cheating software as early as May 2014. That information, however, was in a memo that Winterkorn allegedly overlooked.

cjc/uhe (dpa, Reuters)