Plan view of Volkswagen Osnabrück GmbH.
Friso Genchi | Photo Alliance | Getty Images
Volkswagen Europe’s top carmaker struck a final deal with unions on Friday, announcing sweeping changes to its German operations including more than 35,000 future job cuts and production capacity cuts to avoid mass strikes.
Still, after 70 hours of grueling negotiations – the longest in the company’s 87-year history – the deal was hailed by union leaders as a “Christmas miracle” because there would be no immediate plant closures, layoffs or pay cuts.
Volkswagen has been in talks with union representatives since September over measures it says are necessary to compete with cheaper Chinese rivals, sluggish demand in Europe and slower-than-expected adoption of electric vehicles.
About 100,000 workers have gone on two separate strikes over the past month, the largest in Volkswagen’s 87-year history, to protest against plans to cut wages, reduce production capacity and possibly close a German factory for the first time.
“Following long and intense negotiations, this agreement is an important signal for the future viability of the Volkswagen brand,” group chief executive Oliver Blume said in a statement.
Volkswagen said the deal would save 15 billion euros a year in the medium term and would not have a significant impact on its 2024 guidance. The company said it was looking for alternatives to its Dresden plant and repurposing the Osnabrück plant. Some production will be moved to Mexico.
IG Metall said a 5% wage increase agreed in November would be suspended and car production at the Dresden plant would be shut down by the end of 2025.
“No sites will be closed, no one will be laid off for operational reasons and our company’s wage agreements will be guaranteed in the long term,” works council president Daniela Cavallo said.
“With this triple agreement, we have achieved rock-solid solutions in the most difficult economic conditions,” she said.
The fifth round of talks has been taking place since Monday and continued late into the night this week at a hotel in Hannover, with negotiators taking only brief breaks to refuel with coffee, currywurst and fruit.
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The talks, held in an old, simple business hotel on the outskirts of Hannover, featured multiple rounds of meetings between representatives, sometimes interrupted by brief breaks to stock up on coffee and fruit after midnight.
Some workers even play cards to relieve stress.
Volkswagen’s crisis comes amid uncertainty and political turmoil in Europe’s largest economy and broader unrest among the region’s carmakers.
How to address Germany’s sluggish economy has become a focus of the campaign ahead of snap elections in February, with Chancellor Olaf Scholz, who is trailing in the polls, urging Volkswagen to keep all its factories open.
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