Jefferies: Volkswagen (VWAGY.US) plans to lay off over 15,000 employees when it closes factories.

Jefferies analysts said that Volkswagen (VWAGY.US) may forcefully proceed with factory closures this year, paving the way for the layoffs of over 15,000 people. Jefferies quoted Volkswagen executives on Monday saying that the carmaker could shut down production facilities without needing approval from the supervisory board, which could lead to provisions as high as 4 billion euros (4.4 billion dollars) in the fourth quarter. The board has previously obstructed management's restructuring efforts. Analysts stated in a report, "The unions should feel the pressure to reach a new agreement, and Volkswagen will have the ability to force layoffs." The report referenced comments made by Volkswagen during a North American roadshow. "But unions can only strike over wage issues, not over factory closures or layoffs if there is no contractual protection." A Volkswagen spokesperson declined to comment. The German manufacturer is reportedly struggling with high costs and facing more intense competition from companies like Tesla, Inc. (TSLA.US) and Chinese automakers led by BYD Company Limited (01211). Earlier this month, the company canceled employment protection measures in Germany that had been in place for 30 years after warning it may have to close a plant in Germany for the first time. The decision to terminate the employment protection agreement has led to lengthy conflicts between Volkswagen and labor representatives. The company's layoff plans are more challenging to implement elsewhere, as half of its supervisory board seats are held by labor representatives and the state of Lower Saxony, which owns a 20% stake, often sides with labor unions. Jefferies stated that Volkswagen is considering closing two to three plants and potentially up to five German plants. Volkswagen management told analysts that they have no alternative plan if negotiations with the union on improving competitiveness fail.