Volkswagen, Europe's largest car-maker, on Monday ratcheted up the pressure on German unions further, saying it was intensifying efforts to cut some of the thousands of surplus jobs it has in the country.
The statement by chief executive Bernd Pischetsrieder to workers was the most explicit yet of the difficulties VW is facing and the problems its overcapacity in Germany is causing.
VW has said before it hopes to reduce its workforce through natural wastage by a figure officials have privately said is about 6,000 a year.
But Pischetsrieder told a shop floor meeting on Monday that VW has several thousand workers too many in Germany, in particular at its headquarters at Wolfsburg, the world's largest car plant, which is running at only 70 per cent capacity.
The company has linked the overcapacity issue to the decision of where to build a new small sports utility vehicle, modelled on the Golf hatchback.
The German carmaker has recommended building it in Portugal unless workers at Wolfsburg agree to work under the so-called Auto 5000 model, under which their wages would be 20-40 per cent lower.
This is in order to improve Wolfsburg's costs bb €850 a car against the Portuguese site, which is €1,000 cheaper. Wolfgang Bernhard, head of the VW brand, had already identified €2,000 of additional cost savings just to ensure the vehicle was built.
The new SUV would secure 1,000 jobs in Wolfsburg but a surplus of several thousand would still remain, the company said.
Senior executives said the debate over the SUV would not be a one-off. "Auto 5000 is the future of manufacturing at VW. The harsh truth is that employees at Wolfsburg will have to earn less money or they will lose their jobs," one said.
The short-term financial impact to VW of getting rid of thousands of jobs - either through early retirement or by buying workers out of their contracts - will be high but the car-maker believes it will reap the benefits in the medium-term by bringing the capacities at German factories back up to levels where it can earn a profit.
VW is struggling to export cars profitably to the US - where it made a loss of €1 billion last year - and has seen its earnings slump dramatically in China. But an alleged bribery and corruption scandal involving senior managers and union representatives has given management the chance to push through a series of reforms.
British analyst Stephen Cheetham, of Sanford C Bernstein, said the move to cut jobs "indicates a shift in the political landscape in Germany - helped by scandals which demonstrate the moral bankruptcy of the old consensus - to the point where issues that were taboo until recently are now being actively addressed."