VW and works council supposedly agree on austerity package – a plant is shaking

According to a report, in the collective bargaining round at Volkswagen, the car manufacturer’s board of directors and the works council agreed in principle on a savings program worth billions. As the “Handelsblatt” reported on Friday, citing sources familiar with the events, the announced savings target, which was most recently at four billion euros, will be achieved. The cuts in the factory network are expected to be less drastic than expected.

According to the Handelsblatt, the compromise is to find a buyer for the Osnabrück plant and to reallocate or close the smaller production facility in Dresden. Closing the factories in Zwickau or Emden is said to be off the table, the newspaper reported.

However, this agreement is not yet final, as it was said, as the responsible committees still have to agree. On Friday afternoon, the board of directors, the executive committee of the supervisory board and the employee collective bargaining committee wanted to discuss the negotiated solutions. “It can still fail,” the “Handelsblatt” quoted negotiators as saying.

The fifth round of negotiations in the conflict has been underway since Monday. Both sides negotiated for several nights, interrupted only by short sleep breaks. It is the longest negotiating marathon in Volkswagen’s history. On Thursday evening, IG Metall blamed VW management for the tremors. “The negotiation process is particularly problematic in the internal processes of the employer side,” said the union. The aim is still to find a solution before Christmas. “We now expect the company to create internal clarity as quickly as possible!”.

The main points of contention recently were the future of the plants and job security. Works council leader Daniela Cavallo has repeatedly made it clear that she will not lead to any plant closures. There is a package and the solutions are on the table, company circles said. This also applies to the question of plants and job security. It is crucial that the contracts are concluded legally correctly.

In the conflict, the board of directors around CEO Oliver Blume is demanding, among other things, a wage cut of ten percent and is threatening plant closures. Chief Financial Officer Arno Antlitz repeatedly referred to massive overcapacity: Two million fewer cars would be sold on the European car market than before the pandemic. For VW, this means that there is a shortage of around 500,000 vehicles per year – that is equivalent to the production of two larger plants.

The austerity measures are supported by the Porsche and Piech families, who hold the majority of the Wolfsburg-based car manufacturer. VW supervisory board chairman Hans Dieter Pötsch, who also heads the family-owned Porsche SE, said before the start of the current round of negotiations on Monday that the Porsche SE management and the families were encouraging the VW management to make savings and restructure. “We are convinced that VW is able to adapt its business and assert itself in this challenging competitive environment.”

If it is not possible to reach an agreement for the approximately 130,000 VW employees by Christmas, there will be a risk of strikes starting in January. According to the union, around 100,000 VW employees had already taken part in two warning strikes in the past few weeks. A longer strike could be expensive for Volkswagen. UBS analyst Patrick Hummel estimated the possible loss of sales at up to 100 million euros per day. “The risk of further strikes in the first quarter of 2025 is significant and, in our view, could potentially impact full-year earnings guidance.”