Unions pledge to leave ‘no idea unexplored’ in tackling VW crisis

6:35 am Thursday, September 05th, 2024

By Victoria Waldersee

BERLIN (Reuters) – Germany’s biggest union pledged to leave no idea unexplored, including a move to a four-day week, to counter Volkswagen management’s threat of closing domestic plants for the first time in its history and dissolving decades-old job guarantees.

Volkswagen said on Monday it was considering taking the unprecedented step of closing factories in Germany and ending job guarantees at six of its plants in a drive to deepen a 10 billion euro ($11 billion) cost-cutting plan.

Asked if the union would consider a four-day week as an alternative option, Christiane Benner, chair of IG Metall nationwide, said it was “conceivable”. “We will leave no idea unexplored,” she said.

Still, it was impossible to lay out detailed proposals without more information on what solutions the company was proposing, she added. “We need forward-thinking ideas on where potential can be found,” Benner said. “VW has survived difficult situations before.”

Volkswagen executives said on Wednesday at a packed staff meeting in Wolfsburg that it has “maybe one, two years” to turn its main car brand around to survive electrification.

The auto giant faces a vexing landscape of challenges including slowing demand for cars and particularly EVs, rising competition from China, and a complex governance structure that some investors and analysts say slows decision-making in times of crisis.

Thorsten Groeger, head of IG Metall for the Lower Saxony region where Volkswagen is based, said agreements struck between the company and unions during previous crises were designed specifically to get the carmaker through difficult situations, and should not be thrown overboard in this one.

As part of another cost-cutting drive in 1993, board member Peter Hartz agreed with unions and the works council to introduce a four-day week of 28.8 hours from 1994 onwards, a 20% reduction in working time with a smaller cut in pay.

Widely seen as an innovative model to save 30,000 jobs at its six German plants, the two-year agreement was adapted in subsequent years until management decided in 2006 it was hurting competitiveness and moved away from it.

Speaking to German broadcaster NDR, Stephan Weil, premier of the state of Lower Saxony which houses five of the six plants currently protected by job guarantees, said the carmaker must find a way to share the burden of the crisis fairly.

“In 1993 and 1994 we had a serious crisis that shook up everyone involved… something like that could once again be the basis for an agreement,” Weil said of the agreements struck with unions at the time.

Lower Saxony holds a 40% stake in Volkswagen’s advisory board.

Negotiations are due to start in mid- to late October, with strikes possible from the end of November. The union is pushing the carmaker to bring that timeline forward so as not to leave workers in fear, Groeger said.

(Reporting by Victoria Waldersee, Madeline Chambers, Ilona Wissenbach, Christina Amann; editing by Matthias Williams, Miranda Murray and Jan Harvey)