Volkswagen has reached a deal with the union IG Metall to avoid plant closures and layoffs at its German production sites until 2030, securing jobs and safeguarding products.
Volkswagen Plant Closures and Layoffs Averted, Says Union
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The German automaker Volkswagen had been considering shutting down as many as three factories and implementing mass job cuts. However, the company has now reached a deal with the union IG Metall to avoid involuntary redundancies and plant closures at its production sites in Germany until 2030.
Deal Reached After Marathon Negotiations
After weeks of negotiations, the union representatives finally agreed on a solution that secures jobs, safeguards products in the plants, and enables important future investments. The deal was reached after a marathon session lasting 70 hours, which is the longest in the carmaker’s history.
According to Thorsten Gröger, the union negotiator, “We have succeeded in finding a solution for employees at Volkswagen sites that secures jobs, safeguards products in the plants and at the same time enables important future investments.” He added that no site will be closed, and no one will be laid off for operational reasons.
Key Provisions of the Deal
The agreement includes provisions to cut more than 35,000 jobs in “socially responsible” ways by 2030. Workers will have job security until 2030 but will have to forego wage increases in the coming years and bonuses will be cut. The package also includes painful contributions from employees, but it creates prospects for the workforce.
Volkswagen’s Response
Group CEO Oliver Blume said that the agreement is an important signal for the future viability of the Volkswagen brand. The company believes that the deal will allow savings of €15 billion ($15.6 billion) a year in the medium term and reduce technical capacity at its German sites by 700,000 vehicles.
Thomas Schäfer, VW brand boss, stated that the company had three priorities in the negotiations: reducing excess capacity at the German sites, reducing labor costs, and reducing development costs to a competitive level. He said that the company has achieved viable solutions for all three issues.
Reasons Behind Volkswagen’s Cost-Cutting Measures
The company cited competition from China, sluggish demand in Europe, and slower-than-expected adoption of electric cars as reasons why it needed to cut costs. The deal is seen as a crucial step towards securing the future of the German automaker.
