Volkswagen told union leaders on Tuesday that it was ending a labor agreement that protected workers from layoffs, a week after the automaker said it was considering closing factories in Germany amid slumping sales and rising costs.
The company warned last week that it needed to restructure its namesake brand to remain competitive in the face of falling demand in Europe and abroad and increased competition from China. The measures could include closing one or two assembly plants in Germany, a step that would be a first for the 87-year-old auto manufacturer.
Volkswagen said in a statement that the decision to quit the agreement that offered job security, along with several other labor deals, was necessary to ensure the company’s future.
“We must put Volkswagen in a position to reduce costs in Germany to a competitive level in order to invest in new technologies and new products from our own resources,” Gunnar Kilian, the head of human resources and labor at Volkswagen, said in the statement.
The job security clause in the labor agreement between Volkswagen and the union, IG Metall, which covers workers in the automotive and other heavy industries, has existed since 1994 and had protected workers from layoffs through 2029. Volkswagen said it would remain in effect until the end of the year and that layoffs could happen at the end of June 2025 at the earliest.
Daniela Cavallo, who heads the works council at Volkswagen and is a member of IG Metall, vowed that the union would fight to defend the labor agreement. “We will put up a fierce resistance to this historic attack on our jobs,” Ms. Cavallo said in a statement. “With us, there will be no layoffs.”
Volkswagen said that it was also ending other labor agreements, including one that obligated it to offer permanent positions to all vocational trainees and apprentices at the company, as well as a deal that offered temporary employees wages above the standard rate for the automotive industry.
Nearly half of Volkswagen’s 650,000 workers around the globe are in Germany. The company and the union are expected to begin negotiations on a new wage deal this fall. The union is seeking a 7 percent pay increase, along with additional demands including averting plant closures.
The Volkswagen Group owns 10 brands, include Porsche and Audi. Last week, the company informed union leaders at a plant in Brussels that it had no plans to continue production of its Q8 model there beyond 2025. If no new models can be found, the plant would close and 3,00 jobs would be lost.
The post Volkswagen Quits Labor Agreement, Paving Way for Job Cuts appeared first on New York Times.
