At Volkswagen, talks are underway between trade unionists, IG Metall and the management regarding a new collective agreement. Employee representatives proposed on Wednesday (November 20), just before the third round of talks, 1.5 billion euro savings if the company rules out the considered closure of three factories in Germany. The union's proposal included, among others: resignation from bonuses for 2025 and 2026.
However, trade unionists warned the management against attempting staggered employment cuts. The IG Metall association also warns that the company is trying to force through cuts worth as much as EUR 17 billion, which is being pressured by the shareholders of the Volkswagen concern, including the Porsche and Piech families.
In an internal note published on Volkswagen's intranet and verified by Reuters, a member of the VW management board for labor welcomed the union's proposal, but added that the management still does not rule out closing the factories. “Any suggestion that contributes to achieving our goals helps,” Gunnar Kilian was quoted as saying. “At Thursday's negotiations, we will have a detailed exchange of views to assess the financial assessment of this proposal.”
Thorsten Groeger, who leads negotiations on behalf of the IG Metall union, said that if the management insists on closing factories in Germany – which has not happened in the 87-year history of the group – Volkswagen employees will enter into a dispute with the company “the likes of which this country has not seen in decades.”
The situation at VW is critical due to a number of factors: complicated management, errors in investment planning, weak demand for cars in Europe and China, high costs and changing business conditions in Germany itself.
Car market in the EU: still below expectations
Demand for new cars in Germany and Europe has not reached pre-coronavirus levels. The entire industry suffers from this and must also invest in the transition to the production of electric cars. VW's chief financial officer, Arno Antlitz, recently explained that VW sold 500,000 more cars in Europe. less cars than in 2019
In Germany, sales of electric cars collapsed after state subsidies were discontinued at the end of 2023. Their sales across Europe have not yet developed as expected. President German Institute for Economic Research (DIW) Marcel Fratzscher believes that the producers themselves are partly to blamealso Volkswagen: “It missed the transition to electromobility and autonomous driving.”
According to DIW, it has long been known that the transition from combustion engines to batteries is underway and it was not Germany that decided about it, “but the whole world, and especially large markets such as China and the USA.
China and Trump: problems for EU producers
China itself may turn out to be a big disappointment for VW: the German concern has been investing there for decades and has relied on these investments both in terms of production and the sales market. Meanwhile, in 2023, the German manufacturer was dethroned as the most important car manufacturer in China by local competitor BYD. Demand for VW combustion engines in China has decreased, and local producers are leaders when it comes to electric cars and are expanding to the European market. VW is now also in an additional difficult situation due to the EU's conflict with China after imposing protective tariffs on Chinese electric cars.
Moreover, the return Donald Trump to the White House means further problems for VW and European automotive companies in general if they are hit by the tariffs announced by Trump.
Work in Germany: 20% will disappear at VW. full-time positions
The earning potential in the entire automotive industry is relatively good. VW in particular was considered a generous employer. The company has excluded them for years, but due to the introduction of savings in September, negotiations are ongoing regarding a new collective agreement at Volkswagen. IG Metall wants to avoid layoffs and plant closures at all costs. Otherwise, there is a risk of warning strikes already in December.
However, experts believe that improving the company's operations is necessary. Staff reduction is also a problem across the automotive sector due to the switch to electric production. The Association of the Automotive Industry in Germany estimates that by 2035, every fifth job will disappear compared to the number in 2019. The reason? Production of electric cars, which is less labor-intensive than combustion cars.
Economic conditions and politics
The automotive industry, like others, complains about high energy costs and taxes, too much bureaucracy and sometimes worn-out infrastructure compared to other countries. Automotive expert Ferdinand Dudenhöffer, in an interview with AFP, even indicates this as the main cause of the crisis at VW. “The bridges are falling apart and the railway is descending into chaos,” he said. VW suffers from this too.
Another specific feature of VW is its ownership structure: 20 percent. The state of Lower Saxony owns shares in the company and can veto key decisions. Dudenhöffer is also critical of this. – State ownership in VW is poison for the company. The structures are frozen and it is impossible to respond to changing competition, he said in an interview with AFP.
(AFP, Reuters/Mar)
The article comes from the website Deutsche Welle