Volkswagen, union extend crunch talks over plant closures and pay cuts

HANOVER: Talks between Volkswagen (VW) and labour leaders over German plant closures and pay cuts are expected to continue into today as both sides push for a deal, according to three people familiar with the negotiations.

Talks have been ongoing since Monday in the hope of reaching an agreement before Christmas to prevent massive strikes that the IG Metall union 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.

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

“There’s still much to do,” one of them said.

A separate source said both sides had made some progress in discussions, but it was too early to speak of a solution.

VW and IG Metall declined to comment.

Both sides remain far apart on key issues, including the potential for plant closures, which unions strongly oppose but VW 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.

VW, Europe’s biggest automaker, is also grappling with nimble and cheaper Chinese competitors as well as a slower than expected adoption of electric vehicles (EV).

Citing people familiar with the matter, Bloomberg reported earlier in the day that VW and labour unions were nearing an agreement to restructure the 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.