Gulf over VW German plant closures remains in marathon talks with union

2:36 pm Thursday, December 19th, 2024

By Christina Amann

HANOVER, Germany (Reuters) -Talks between Volkswagen and labour leaders about cost-cutting measures at Europe’s biggest automaker will continue into Friday with no deal reached after days of negotiations, management and union leaders said on Thursday.

Both sides remain at odds over key issues including job security and the future of the carmaker’s German plants after more than 50 hours of talks aimed at avoiding strikes, a person familiar with the negotiations said.

Talks have been going on late into the night since Monday in the hope of reaching a deal before Christmas and preventing potentially damaging large-scale industrial action, which Germany’s most powerful union IG Metall has warned could begin early next year.

Around 100,000 workers have already staged two separate strikes in the past month, the largest in Volkswagen’s history, protesting against management plans to cut wages, reduce capacity and potentially shut German plants for the first time.

There has been significant progress on the issue of wages, but it is not clear whether there would be an agreement before Christmas, another source said, adding that the future of VW’s Osnabrueck and Dresden plants looks uncertain.

IG Metall said earlier that while some progress had been made in the discussions, which initially started in September, they remained at loggerheads in other areas, without providing further details. “Accordingly, a longer interruption or termination of the fifth round of negotiations is always among the possible scenarios for an outcome,” a spokesperson for the union said.

The crisis at the German automaker has hit at a time of uncertainty and political upheaval in Europe’s largest economy, as well as wider turmoil among the region’s automakers. How to fix Germany’s sluggish growth has taken centre stage as a campaign issue ahead of a snap election in February.

Volkswagen declined to comment.

VW’s structure is unique, with management having to get approval from a two-thirds majority in the 20-strong supervisory board for any decision to build or move a production plant. That means 10 members representing German labour unions can veto any far-reaching plans that affect factories.

Workers strongly oppose plant closures, but Volkswagen has said it may be necessary to find around 4 billion euros ($4.2 billion) in required cost cuts and respond to what it expects is structurally weaker demand in Europe.

Scenarios under discussion include capacity cuts rather than full plant shutdowns, the sources said, adding that one possibility could be shifting production of the Golf model to Mexico from VW’s main plant in Wolfsburg.

Volkswagen is also grappling with nimble and cheaper Chinese competitors as well as a slower-than-expected adoption of electric vehicles.

Citing people familiar with the matter, Bloomberg reported earlier that Volkswagen and unions were nearing an agreement to restructure the VW brand without closing factories in Germany.

Management is willing to keep plants running and restore job security agreements until 2030 in exchange for workers foregoing bonus payments, the report said.

($1 = 0.9621 euros)

(Reporting by Christina Amann; Writing by Maria Martinez; Additional writing by Tom Sims; Editing by Christoph Steitz, Sherry Jacob-Phillips, Mark Potter, Alexander Smith and Mark Porter)