Plant closures and job cuts: Volkswagen resumes talks with unions

Management and unions at Volkswagen have yet to find common ground in talks concerning the German car maker’s proposal on possible job cuts and plant closures. Workers took strike action on Monday.

The fourth round of collective bargaining negotiations at Volkswagen AG on Monday failed to find a solution between management and unions.

Thousands of employees downed tools for four hours in nine German plants as bosses and unions began a new round of negotiations over pay cuts and plant closures.

The renewed negotiations were aimed at ending a standoff between the German car maker and its employees after the car giant rejected the latest proposal put forward by the unions, including reduced working hours, lowering dividend payouts and cutting some bonuses, which all together meant saving €1.5bn.

After the talks on Monday, the company’s chief negotiator Arne Meiswinkel said: “We are still a long way from a viable solution,” but added that the discussions were “constructive”.

In an email to Euronews, the company said: “To reach our goal, we need a cost relief that can be implemented in the short term and has a lasting effect. This is the only way we can secure our future investments.”

Volkswagen, struggling with poor demand in Europe and competition in China, wants to make €10bn of savings. It is considering the unprecedented closure of plants in Germany, slashing thousands of jobs and cutting pay by 10%. The company argues that it must lower costs in Germany in order to preserve its competitiveness.

The management of Volkswagen AG aims to reduce the company’s excess capacity, and lower factory costs, including high labour costs.

After the negotiations, the dominant metal workers union IG Metall said on their website: “The company’s top management had announced that they wanted to cut wages, close plants and lay off thousands of employees.”

Unions doubtful over cost-cutting measures

But the unions doubt that these are the only cost cuttings that can help. After the negotiations on Monday, IG Metall negotiator Thorsten Gröger said: “A solution must be found without site closures and redundancies. … The burden of supporting future investments must not be passed on unilaterally to the employees. The board of directors and shareholders also have a duty to make their fair contribution.”

German Chancellor Olaf Scholz also joined the debate by calling on the car maker to hold off shutting down factories, Funke media group reported. Scholz acknowledged that it was up to the company and its staff representatives to discuss the matter.

The negotiations were accompanied on Monday by warning strikes at nine Volkswagen locations. According to the unions, around 68,000 employees stopped work early in the afternoon. Last week, 100,000 employees nationwide stopped work for two hours to take part of a so-called “warning strike”.

On Monday, 38,000 employees demonstrated in front of the carmakers headquarters in Wolfsburg, against the VW board’s plans – plant closures, mass layoffs and wage cuts, according to IG Metall.

More talks and more strikes are both on the cards

Talks are to be resumed next week. IG Metall and Volkswagen have agreed to continue the collective bargaining talks on 16 and 17 December.

According to the chief negotiator of Volkswagen, discussions will be intensified “at the operational level on plant occupancy and capacities in Germany.”

Meiswinkel added: “Here too, the positions are still far apart. We still cannot rule out plant closures.”

The unions described the negotiations as “conditionally willing to shape things”, but added that they was still “a long way to go before a possible rapprochement”.

The unions are threatening strikes in 2025 if a deal is not done.

“If there is no agreement in the interests of the employees before Christmas, IG Metall reserves the right to significantly intensify warning strike measures in 2025,” said the union in a statement.