Written by Christina Amann
HANOVER (Reuters) – Volkswagen announced sweeping changes at its German operations, including more than 35,000 future job cuts and reduced capacity in the final deal between Europe’s top carmakers and unions on Friday to avoid more strikes.
The deal was however hailed as a “Christmas miracle” by union leaders after 70 hours of tough negotiations, the longest in the company’s 87-year history, as there would be no immediate closures, layoffs or wage cuts.
Volkswagen (ETR:) has been in talks with union representatives since September over measures it says are needed to compete with cheaper Chinese rivals, a lack of demand in Europe and slower-than-expected adoption of electric vehicles.
About 100,000 workers have held two separate strikes in the past month, the biggest in Volkswagen’s 87-year history, protesting plans to cut wages, cut capacity and close German plants for the first time.
“After long and intensive negotiations, the agreement is an important sign that the Volkswagen company will work for the future,” said the group’s chief executive Oliver Blume in a statement.
VW said the deal would allow savings of 15 billion euros a year in the medium term and would not have a major impact on its 2024 guidance. It said it was looking at alternatives to its Dresden plant and reusing the Osnabrueck site. Some production will be transferred to Mexico.
IG Metall said the 5% wage increase agreed in November will be suspended and car production will be shut down at the Dresden plant by the end of 2025.
“No place will be closed, no one will be laid off for work reasons and the salary agreement of our company will be held for a long time,” said Daniela Cavallo, the head of the labor council.
“With this triple agreement, we have achieved a strong solution under difficult economic conditions,” he said.
The fifth round of negotiations has been ongoing since Monday and continued late into the night at a hotel in Hanover this week, with negotiators taking only short breaks to sleep and fueling themselves with coffee, sausage and fruit.
CAMPAIGN ISSUE
The talks took place in a nondescript old hotel on the outskirts of Hanover, where delegates from both sides met in various rounds punctuated by short breaks where they stocked up on coffee and fruit after midnight.
Some workers even played a round of cards to decompress.
The crisis at VW has struck at a time of uncertainty and political turmoil in Europe’s biggest economy, as well as turmoil among the region’s automakers.
How to fix Germany’s sluggish growth has taken over as a campaign issue ahead of snap elections in February, with Chancellor Olaf Scholz, trailing in the polls, urging VW to keep all its factories open.
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