Strike threats loom at Volkswagen during labor talks about major cuts

Thousands of angry Volkswagen (VW) workers from across Germany gathered on Thursday to protest possible factory closures at the carmaker, outside where union leaders met the company for negotiations.

The IG Metall union said more than 7,000 workers joined the protests from all ten VW factories in Germany, demonstrating outside the doors of the Wolfsburg arena where collective bargaining is taking place.

Volkswagen, Europe’s largest carmaker, is in deep crisis and management has threatened possible factory closures and mass layoffs in a bid to drastically reduce labor costs. Management is also reportedly demanding an across-the-board 10% pay cut from VW employees.

Labor leaders, meanwhile, have vowed to launch a bitter battle, and what they warn could be an unprecedented battle against any attempt to make such cuts at the expense of workers.

The union and the VW works council on Thursday called for a deal before Christmas, warning that initial strikes at VW could loom in coming weeks if management does not make concessions in the day’s talks.

‘Future instead of austerity’ and ‘All plants must stay’ were among the slogans on banners. As possible strikes loomed at Volkswagen in the coming weeks, workers chanted, “We are ready!”

“This is just a taste of what will happen from December if the company does not take our concrete proposals for solutions seriously,” said VW works council chairman Daniela Cavallo.

A mandatory labor peace period, which bans strikes during initial negotiations, expires at the end of this month.

Gröger and Cavallo publicly presented a proposal for employees to forego salary increases and agree to flexibility to reduce hours at German VW factories in exchange for job protection. A package they say would save the company around €1.5 billion ($1.6 billion).

They said Volkswagen executives would also have to agree to forego bonuses and give up pay increases as part of the offer.

VW management initially reacted cautiously and skeptically to the proposal, but showed openness to discussions. The company said it remains committed to cost-saving goals.

“Today is the very last chance for Volkswagen to find a good solution without factory closures and mass layoffs before the end of the peace period,” warned Thorsten Gröger, chief negotiator of IG Metall. Otherwise there is a risk of escalation from December 1.

“If a solution is not found today, there will be no chance in November,” Gröger said. “Then we will prepare for industrial action.”

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“Volkswagen can prepare from the beginning of December: behind every Advent calendar door there is a surprise,” he added.

The VW brand is a major subsidiary of the larger Volkswagen Group, which also owns other brands including Audi, Porsche, SEAT, Škoda and Scania, among others.

The performance of VW’s core brand has lagged behind that of other brands in the VW Group portfolio, and executives have said the company has struggled with high labor costs, excess production capacity and difficulties in the transition to electric vehicles.

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The cost-cutting measures are aimed at increasing core brand returns to 6.5% profit margins by 2026. Company executives argued that such returns are necessary to finance necessary investments, including the launch of new electric models.

The company recently indicated that it is open to solutions that do not involve factory closures and mass layoffs in Germany, but only if such a deal still allows Volkswagen to achieve its cost-cutting goals.

VW’s internal wage agreement applies to approximately 120,000 employees at the six major VW factories in the western German states of Lower Saxony and Hesse.

Workers at other VW factories in the eastern German state of Saxony are covered by a separate wage agreement, although union leaders have also sought to address the future security of jobs at those factories during the talks.