Even the employees’ own savings proposal does not bring about a breakthrough. The VW board and the employees were unable to agree on Thursday how savings should be made in the company’s crisis. The employees are resisting the board’s plan to close up to three German plants, cut tens of thousands of jobs and cut wages by ten percent.
Now the signs point to warning strikes. The peace obligation ends on November 30th, then warning strikes are permitted. “We will prepare for an escalation scenario from the beginning of December,” said Thorsten Gröger, IG Metall negotiator, after the talks. “If necessary, it will be a labor dispute that the Federal Republic has not experienced in decades.” Even before the talks, he had emphasized that the negotiations on Thursday were the very last chance for Volkswagen to find a good solution before the peace obligation expires to come about without factory closures and mass layoffs. Negotiations will continue on December 9th.
Works council boss Cavallo had already warned the board on Wednesday in the SZ interview not to insist on maximum positions such as plant closures. VW employees have taken part in major strikes in the past, both in 1984 and 2003. In the 2018 collective bargaining round, 60,000 employees stopped work.
This Thursday, 6,000 VW employees put pressure on management with a rally before the talks. They traveled to Wolfsburg from all of the republic’s factories with self-painted posters, whistles and red flags to demonstrate for their jobs.
The union and the works council had presented their own concept for the negotiations. It plans to save around 1.5 billion euros over two years through cuts in personnel costs. Among other things, by waiving profit sharing and modernizing the salary system. They also propose financing shorter working hours through a two-year zero wage period. To achieve this, VW should increase salaries like in the entire metal industry, but not pay out the money to employees like other companies, but rather put it into a solidarity fund. This will be used to pay the salaries of employees whose factories are temporarily underutilized.
The condition for the employees’ savings contribution is that shareholders and the board of directors also make a financial contribution – and that neither plants are closed nor anyone is laid off. People want to agree to socially acceptable staff reductions, which have already taken place in recent years.
VW management initially reacted cautiously to the offer on Wednesday. Above all, the suggestion that VW pay the 5.5 percent more wages as in the general metal collective bargaining agreement, but into a fund, left one or two VW managers perplexed. There was talk of “Milkmaid Bill” or “smoke candles”. Human resources director Gunnar Kilian said in a statement that plant closures could still not be ruled out.
The negotiations are about concrete numbers
After the negotiations, management made a cautiously positive statement on Thursday evening: “We see it as a signal that the employee side has shown itself to be open to reducing labor costs and capacity.” However, the counter-proposal that has been put forward must be measured against whether it is both sustainable creates financial relief for the company and also offers clear prospects for the workforce.
The fact that in two years – that’s how far the union’s savings plan goes – VW will again sell so many cars that the factories have enough work for all employees seems questionable to management in view of the current developments on the European car market. Even in October, only slightly more cars were sold in Europe than in the same month last year. Compared to 2019, the market is still in the red with around two million vehicles per year.
The VW works council chairwoman Daniela Cavallo criticized after the end of the talks on Thursday: “The board has been provoking for weeks with the most historical breaking of taboos: plant closures, mass layoffs, wage cuts. And yet the employee side went on the offensive and showed the board a compromise line.” It is now up to the company to move and approach IG Metall. She also referred to the end of the peace obligation on November 30th: “It begins with the opportunity for the workforce to show the board that they are ready to take to the streets for their legitimate demands.”
Wolfgang Schroeder from the University of Kassel sees an enormous management failure: “The board rested for a long time on the China business, which is no longer running,” says the researcher who specializes in labor relations South German newspaper. VW is currently selling too few vehicles for production, so changes to personnel are necessary. “Nevertheless, it is astonishing that the board is making such a radical proposal. He could have sought a compromise.”
Frank Schwope points out that VW was in the red during the crises of the 1970s and 1990s, but has made record profits in recent years. “Despite the profit warning, an operating result of almost 18 billion euros is expected this year too,” says Schwope, who teaches automotive economics at the Fachhochschule des Mittelstands in Hanover. “The profit targets go well beyond what was usual before Corona.”
But it is also a fact that factories are underutilized and 20 to 30 percent fewer people are needed to build electric cars than to build combustion engines. Cuts could therefore hardly be avoided. “But they are not as necessary as the board suggests,” says Schwope. The union’s savings proposal is a first step in the negotiations.
Stefan Bratzel from the Center of Automotive Management considers the offer to be “far from sufficient”. Many billions will have to be invested in the next three to five years, be it for software development, new production processes or autonomous driving. In order to cover the costs, Bratzel believes that VW management’s demands, which include salary cuts of ten percent, are more realistic. “In the end it’s about competitiveness. And if VW doesn’t catch up, such small concessions will be of little use. Then the situation will look even worse in two years.”
Meanwhile, in Wolfsburg we hear more and more often about another option for individual factories: selling. As a result, VW would get rid of its excess capacity in car production and the employees would have prospects at another company. The Osnabrück location is often mentioned in such considerations. In 2009, VW took over the factory there from the insolvent convertible manufacturer Karmann, but the order situation is currently looking particularly bleak. From 2026 onwards there will no longer be a model from the VW Group that will be allocated to Osnabrück.
Possible interested parties include companies from the arms industry. Rheinmetall already has a close partnership with the automotive supplier Continental. Since Conti is cutting staff and Rheinmetall is looking for many new employees, the companies are working to ensure that employees move from the automotive industry to the defense industry as smoothly as possible.
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