Warning light flashing for Slovakia's auto industry

Warning light flashing for Slovakia's auto industry

When David landed an assembly line job at Volkswagen’s Bratislava factory, his colleagues congratulated him on securing a well-paid position he could ride to retirement, reports Trend citing to Reuters.

Two years later, he is among the 3,000 workers being laid off at the plant that produces the Volkswagen Touareg and Porsche Cayenne in a round of job cuts that has sent shockwaves through Slovakia, the world’s biggest car producer per capita.

“All my colleagues were saying there’s nothing to worry about, if I get used to the work load and work pace, the salary will gradually increase and I will have a stable job until retirement,” said David, who declined to give his last name.

“And suddenly I get a call from human resources and learn that I’m being let go.”

The job losses at the factory, Slovakia’s largest private sector employer, underline the challenges the country faces to keep the engine revving in an industry that accounts for about 12% of annual economic output and more than one in ten jobs.

Competition from lower-cost southeastern European markets, a shift to electric vehicles and global trade tensions are among the headwinds buffeting the small central European nation as automakers mull where to launch future production lines.

Volkswagen itself is looking at building a new plant in eastern Europe, with trade publications citing Bulgaria, Serbia and Turkey as the most likely locations.

While David found a job at another carmaker, the layoffs at the Bratislava plant, which also makes the Audi Q7 and Q8 models, have put the government on alert.

“To use a car metaphor, we see a warning light, we don’t need to take the car for a general repair yet,” economy minister Peter Ziga told Reuters.

“We have 300,000 people working in the car sector (directly and indirectly). Should anything happen to them it would be serious.”

The uncertainty has spurred unions, which have previously pushed for big wage increases, to change tack.

“At the moment, we do not focus on salaries, the priority is job stability,” Volkswagen union chief Zoroslav Smolinsky told Reuters. “We need to wait out the worse times and wait for the better times.”

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