Volkswagen and IG Metall Face Off Over Pay and Plant Closures

Volkswagen and IG Metall start negotiations over pay and potential plant closures in Germany. Plant closures, a first for the firm, would put it in conflict with the union. Volkswagen argues high energy and labor costs disadvantage it against competitors, pushing its core brand to restructure for competitiveness.

Volkswagen and IG Metall have commenced pivotal discussions on wage negotiations and potential factory closures, marking a significant moment for Germany's largest automaker. The specter of closing plants, unprecedented in Volkswagen's German history, has heightened tensions, with IG Metall pledging to resist any such actions.

IG Metall's challenge also includes renegotiating labor contracts for Volkswagen's 130,000 core brand employees in Germany. Earlier, Volkswagen terminated agreements ensuring job security at six plants in western Germany since the mid-1990s. Volkswagen contends that high energy and labor costs in Germany place it at a competitive disadvantage compared to both European and Chinese competitors targeting the electric vehicle market.

Emphasizing the urgency, Volkswagen's personnel chief, Arne Meiswinkel, stated that the brand must reduce costs to remain competitive. He warned that Germany's industrial sector is lagging behind, threatening Volkswagen's market position. As Germany grapples with industrial challenges, other automotive giants like Mercedes-Benz and BMW are also feeling the strain of reduced Chinese demand, leading them to lower profit forecasts.

(With inputs from agencies.)