Volkswagen saves a game by reaching an agreement in principle with unions on factory closures in Germany

The Volkswagen automobile company and the IG Metall union have reached an agreement in principle in Germany, which would contemplate the sale, change of production or possible closure of two of its ten factories in the country with the aim of saving about 4,000 million. The firm, which has some 120,000 workers in Germany and ten plants located in Wolfsburg, Emden, Osnabrück, Hannover, Zwickau, Dresden, Kassel, Salzgitter, Braunschweig and Chemnitz, thus saves a fundamental game ball.

Company and workers may have agreed, as published by the economic media Handelsblatt, the sale of its Osnabrück plant and the change in production or closure of the smaller factory in Dresden. Furthermore, this agreement, which is not definitive, would allow the company to achieve the savings objective announced by the company, of 4,000 million, and would mean reducing the claims of the automobile company, which had initially proposed the closure of at least three of its ten factories in the country, according to the works council.

Volkswagen and the workers have been negotiating the collective agreement and a cutback plan in Germany since last September, in a context of plummeting sales in China and a slower-than-expected transformation towards electric mobility. In this context, their rapprochement of positions intensified this week, with the start of the fifth round of negotiations on Monday, which has been extended until this Friday, with sessions until the early hours of the morning and the objective of reaching a agreement before Christmas. This being the case, both the works council and the Board of Directors will now have to give their approval to this agreement in principle, which is why “it may still fail.”

The case of Volkswagen reflects the complex situation in which the European automotive industry finds itself. . The unexpected slowdown in the adoption of electric cars, together with the rise of cheap electrified vehicles manufactured by Chinese firms, is putting enormous pressure on the automotive industry of the Old Continent. Thus, Stellantis, whose CEO recently left office, announced in June its plans to close the factories in Luton and Ellesmere Port, located in the United Kingdom, due to the unexpected slowness in demand for electric vehicles. The parent company of Citroën and Fiat warned that if the British government did not apply stimuli to the purchase of electrified vehicles, it would close its facilities in both cities.

For its part, Renault stopped production at the Flins-sur-Seine factory in March, after 72 years of activitystarting a conversion towards the “circular economy”, according to the company itself. The end of the manufacturing of the firm’s vehicles in said factory coincided with the notification of failures in the manufacturing of the Zoé and Megane IV electric models. Coincidence or not, the truth is that Electric car sales fell 17% in the first six months of the year.

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