Volkswagen: Savings plans determine VW collective bargaining round – profits collapse

In the middle of the discussion about factory closures, layoffs and wage cuts at Volkswagen, representatives from VW and IG Metall met for their second round of collective bargaining. While VW defended its tough austerity measures and announced concrete proposals, the union called for factory closures to at least be discussed again. This is a prerequisite for further negotiations, said Lower Saxony’s IG Metall district manager Thorsten Gröger at the start of the second round of collective bargaining in Wolfsburg. Meanwhile, the company reported weak numbers.

From July to September there was a massive drop in profits. The consolidated profit after taxes fell by 64 percent to 1.58 billion euros compared to the same period last year, while the result from ongoing business fell by 42 percent to 2.86 billion euros. Sales, on the other hand, were only slightly below the previous year’s level, despite a drop in sales of seven percent.

Concern for plants and jobs

Works council boss Daniela Cavallo reported on Monday about VW’s plans to close at least three plants in Germany, cut tens of thousands of jobs and reduce collective wages across the board by ten percent. The group itself has not yet confirmed the information.

Gröger said: “We expect today that the company will at least declare its willingness to enter into a negotiation process with us that aims to develop alternatives to plant closures and redundancies for operational reasons.” Only then can real negotiations begin. Otherwise, Gröger threatened, IG Metall would prepare for “further escalation.” Warning strikes at Volkswagen will also be possible from December 1st. The discussions continued in the afternoon.

VW defends planned savings

VW negotiator Arne Meiswinkel, HR director of the core brand, defended the tough austerity measures. “The situation is getting worse,” he said before the talks began. “As a result, we have to increase our efficiency and reduce our costs.” Because, says Meiswinkel: “Only those who operate successfully can offer secure jobs.” Maiwald announced that in this second round of talks he would also present concrete ideas about the savings required by VW.

The ailing core brand VW made more sales in the third quarter than a year earlier, but operating profit fell significantly. “This shows the urgent need for significant cost reductions and efficiency improvements,” said CFO Antlitz, referring to the brand’s weak return on sales of just 1.8 percent.

Cavallo calls for a future concept

Works council boss Cavallo, who sits at the negotiating table for IG Metall, calls on the group to work together to develop a future concept for the group. “Every crisis has always been overcome together with the works council and IG Metall. And that’s exactly the path we want to take.” The works council also does not fail to recognize that “we are in a difficult situation”. We also want to take this situation into account. But Cavallo added, “There’s a lot more to it than just talking about labor costs and factory costs.”

According to “Handelsblatt”, VW’s planned wage waiver alone is expected to bring about two billion euros in savings. The salary reduction of ten percent would bring in almost 800 million, and a further 1.2 billion would come from the cancellation of various bonus payments and surcharges as well as zero rounds in the coming years. This means that more than half of the total planned savings of almost 3.6 billion euros should be achieved through wage cuts alone. The company has not yet commented on this.