Volkswagen CEO Anticipates Major Concessions from Unions in Crucial Negotiations, According to Reuters

FRANKFURT (Reuters) – The CEO of Volkswagen expects labor unions to propose ways to reduce costs and enhance competitiveness, just two days ahead of discussions regarding plant closures and new wage agreements.

Earlier this month, Europe’s leading automaker canceled its long-standing job security arrangements and announced that it was contemplating plant closures in Germany for the first time. This decision has led to heightened tensions with labor unions, who have vowed to oppose any such moves vigorously. As a result, negotiations for a new wage agreement and future budgets are set to commence a month earlier than planned, starting on September 25.

Unions have dismissed the possibility of plant closures, raising concerns about where savings can be achieved without resorting to job cuts. Volkswagen Group Chief Executive Oliver Blume indicated that significant progress is expected in negotiations to improve cost efficiency. He remarked that costs at Volkswagen are excessively high compared to international rivals and noted that the company would be examining various cost reduction strategies, including development, materials, and manufacturing expenses.

Blume also pointed out that labor costs in Germany are double the average in Europe, emphasizing the need for a comprehensive agreement on investments and labor conditions this year.

His statements coincide with an upcoming virtual meeting between car manufacturers and suppliers with Germany’s Economy Minister, Robert Habeck, to discuss the state of the automobile industry, which is vital to the German economy. This meeting comes amid increasing challenges facing domestic carmakers, with both BMW and Mercedes-Benz recently issuing profit warnings linked to a declining car market in China, the largest globally.