Automotive News Europe — 2024-09-10
Automotive Industry
The automaker says flagging car sales have left it with about two factories too many.
Volkswagen is scrapping a range of labor agreements including a guarantee of jobs until 2029 at six German plants, raising the prospect of layoffs from 2025 that worker representatives have vowed to resist.
The company has canceled several agreements linked to a three-decades-old pact that was supposed to safeguard employment until 2029, VW said. Guarantees will effectively run out by the middle of 2025.
The moves are meant to "reduce costs in Germany to a competitive level," VW's human resources chief Gunnar Kilian said in a statement on 10 September 2024.
VW's main target is its underperforming namesake passenger car brand, whose profit margins are getting squeezed amid a sputtering transition to EVs and a consumer spending slowdown. Automakers in Europe are also struggling to compete with Tesla and new entrants from China led by BYD.
Cutbacks at VW are harder to push through than at other companies. Half the seats on the company's supervisory board are held by labor representatives, and the German state of Lower Saxony, which owns a 20% stake, often sides with trade union bodies.
The automaker, which employs almost 300,000 people in Germany, has defended its plant closure plans, saying flagging car sales have left it with about two factories too many.
Thorsten Groeger, chief negotiator for the main IG Metall union, said VW's plans may result in unintended additional costs for the company of close to €1 bn ($1.1 bn).
Ending the guarantees would trigger higher wages under previous collective bargaining pacts, Groeger said in a separate statement.
"We will put up a fierce resistance to this historic attack on our jobs," said Daniela Cavallo, VW's top employee representative and a supervisory board member. "With us, there will be no layoffs."
IG Metall has previously said it could consider moving to a four-day week as an alternative to closures -- replicating an earlier cost-cutting drive in the 1990s.
In a bid to counteract uncertainty around labor agreements, VW says it is offering to bring forward wage negotiations. Such talks were due to start in mid- to late October 2024, with strikes possible from the end of November 2024, but the works council has called for the talks to start this month (September 2024).