Union signals progress in marathon Volkswagen talks, but collapse still possible

9:41 am Thursday, December 19th, 2024

By Christina Amann

HANOVER, Germany (Reuters) -Volkswagen and labour representatives have made progress in some areas after around 50 hours of talks over German plant closures and pay cuts but remain apart in others, the IG Metall union said in a statement on Thursday. “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.

Talks stretching deep into the night have been ongoing since Monday in the hope of reaching a deal before Christmas to prevent massive strikes that IG Metall has warned could begin as early as next year.

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

The Volkswagen crisis 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.

There has been significant progress on the issue of wages in the Volkswagen talks, but it is not clear whether there would be an agreement before Christmas, a source familiar with the negotiations said. The future of the Osnabrueck and Dresden plants looks uncertain.

While there is a strong desire by both sides to find common ground, talks could still fail, several sources said, requesting anonymity as the negotiations were private.

Volkswagen declined to comment.

Both sides remain far apart on key issues, including the potential for plant closures, which workers strongly oppose but Volkswagen has said may be necessary to cut costs 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. Last week, Handelsblatt reported that one possibility could be shifting production of the core VW brand’s Golf model to Mexico from the German carmaker’s main plant in Wolfsburg.

Volkswagen, Europe’s biggest automaker, 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 in the day that Volkswagen and labour 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.

(Reporting by Christina Amann. Writing by Maria Martinez. Editing by Christoph Steitz, Sherry Jacob-Phillips and Mark Potter)