BERLIN — In the heartland of Germany’s biggest carmaker, Volkswagen, politicians have long been able to forestall the worst. Now, it seems, they no longer can.
As Volkswagen threatens to shutter German plants for the first time in the company’s 87-year history, politicians who have for decades protected workers from mass layoffs are struggling to come up with answers amid rising labor frustration and the threat of massive strikes.
“As time goes on, we are also realizing that many people are simply really angry that this is being done,” said Thorsten Gröger, chief negotiator for IG Metall, Germany’s largest labor union.
Gröger said “warning strikes” will take place before Dec. 9, ahead of the next round of negotiations with management over cost cuts, and threatened much more sweeping action should talks go poorly. “There is the possibility of larger-scale industrial action,” he said. “We are prepared for that.”
The challenges come at a time when Germany’s government is unable to act following the collapse of the three-party ruling coalition earlier this month. It could be several months before Germany has a new government, as negotiations between the parties could drag on well after the Feb. 23 election. Even then, the country’s constitutional debt brake, which restricts spending, is likely to limit the new coalition’s firepower.
In Germany there are few more potent symbols of the country’s rising economic woes than the decline of VW. Amid plummeting profits, flatlining sales in Europe and a collapse in its core Chinese market, the automaker announced late last month that it is planning to shutter factories on German soil.
Early investments in electric-car technology were plagued by delays and high costs, causing VW to fall behind United States rival Tesla and China’s BYD. Should U.S. President-elect Donald Trump now follow through on his threat to impose tariffs on European imports, it would further compound the already difficult situation for workers in German plants.
VW’s troubles are a parable for German industry more broadly, with manufacturers across the country hemorrhaging jobs. The steady drumbeat of bad economic news grew louder this week as steelmaker Thyssenkrupp announced it could shed up to 11,000 positions by 2030.
But trouble in the automotive sector will hit Germany particularly hard. The industry is responsible for 11 percent of manufacturing jobs in Germany, going beyond the car brands to their suppliers. Bosch has announced it is cutting 3,500 jobs; ZF Friedrichshafen is considering laying off at least 12,000 employees by 2030; Continental is looking to cut 5,500 positions worldwide.
Germany’s malaise is enervating Europe at a time when France, the EU’s second-largest economy, is facing its own escalating turmoil. There, far-right figurehead Marine Le Pen is threatening to bring down the country’s fragile coalition government by voting against Prime Minister Michel Barnier’s budget — a move that would strike fear into financial markets.
In Germany, the combination of dire economic news and political paralysis is fomenting anger ahead of the country’s planned Feb. 23 early election. That anger is especially likely to impact Chancellor Olaf Scholz’ Social Democratic Party (SPD), the traditional backer of labor, which is already facing dismal poll numbers.
Lower Saxony, where VW is based, remains an SPD stronghold, and the party is inextricably linked to the automaker. The state holds a 20 percent stake in VW, and the state’s premier, SPD politician Stephan Weil, sits on its board.
“With the support of the state, VW has become a large and globally successful company over the past 75 years,” Weil said in an interview with German daily Süddeutsche Zeitung. It would not, he added, “be wise to dismantle the expensive structures” that have been built to produce electric cars.
Weil’s proposed solutions are very familiar: He wants to restore federal subsidies for electric car purchases or create tax incentives for consumers. The SPD — along with the Greens — wants to revive energy-intensive German industry more broadly by reducing energy prices through subsidies.
The question is whether such moves — even if politicians could agree on them — would be enough given the massive structural problems Germany faces.
As Russia’s war in Ukraine and rising protectionism fundamentally alter the global trade that has served as the basis for Germany’s export model, German politicians are facing an uncomfortable truth: The regular tools at their disposal may not be enough.
“The challenges are deeper and greater than we have perhaps acknowledged in the debates and political decisions of recent years,” Greens Economy Minister Robert Habeck said at an industry summit on Tuesday.
Ahead of an election in which the far-right Alternative for Germany (AfD) party is polling in second place, mainstream parties will likely have to reckon with a rising voter backlash.
“The question of how to solve the situation at Volkswagen is an example for how we solve the future problems of industry as a whole,” chief negotiator Gröger said. The urgency of the situation, he added, requires “concrete political action” and not “beautiful election campaign posters.”
Jordyn Dahl contributed reporting.
The post Germany’s industrial woes stir anger ahead of key election appeared first on Politico.
