Volkswagen’s workers union has put forward a proposal for $1.6 billion in cost savings, with the condition of avoiding plant closures in Germany, as reported by Reuters. The automaker is looking to implement cost reductions to enhance competitiveness and ensure sustainability. This includes potential factory closures and layoffs.
In September, Volkswagen announced the scrapping of labor agreements in Germany to pave the way for job cuts at six plants in the country, aiming to reduce costs by over $17 billion. The latest proposal from the workers union comes just before a third round of negotiations between employees and management regarding pay cuts and potential factory closures in Germany.
The proposed cost-saving measures include forgoing bonuses for the years 2025 and 2026. Volkswagen CEO Oliver Blume recently confirmed the necessity of a cost-cutting program to address long-standing structural issues within the company.
However, the IG Metall union has expressed concerns about extensive cuts and warned of significant conflicts if the automaker proceeds with such measures. While the union is open to addressing labor costs, they are strongly opposed to factory closures.
In an internal memo, a Volkswagen board member for human resources acknowledged the union’s willingness to discuss labor costs but did not rule out the possibility of factory closures. IG Metall lead negotiator Thorsten Groeger emphasized the potential for conflict if closures were to occur, stating that the company’s finances are not in dire straits as they were in previous crises.
The union’s chief negotiator, Groeger, mentioned that there is room for action and investments to rectify past expensive mistakes without resorting to drastic measures like plant closures. Potential strikes at Volkswagen’s German sites could commence on 1 December if an agreement is not reached.
Volkswagen has indicated that job cuts, including a 10% pay reduction, are necessary for the core VW brand to remain competitive. The ongoing negotiations between the workers union and management will determine the path forward for Volkswagen’s cost-saving initiatives.
