Volkswagen Workers Begin Second Walk-Out as Cost-Cut Negotiations Continue

By Dominic Chopping

Volkswagen workers began striking for the second time this month on Monday as employee representatives and management enter a fourth round of talks over deep cost-cutting measures at the car maker.

The talks come as labor leaders and executives remain at loggerheads over how the company should proceed with domestic cost cuts as it aims to restore competitiveness amid sluggish electric-vehicle demand, competition from Chinese rivals and high labor costs.

Around 100,000 workers across nine plants in Germany walked off the job for two hours last week in a warning strike aimed at pushing back against plans for potential factory closures and sweeping cuts to jobs and pay.

As talks continued Monday, workers stepped up the pressure by beginning walk-outs lasting four hours per shift, bringing production to a halt across the nine factories.

Volkswagen employs around 300,000 workers in Germany and operates 10 plants in the country.

The auto giant has put forward plans to cut workers' pay by 10%. According to the head of Volkswagen's works council, Daniela Cavallo, the company also aims to shut at least three factories in Germany and lay off tens of thousands of staff.

Labor leaders are refusing to accept any factory closures, pay cuts or mass layoffs.

In a speech to workers at the company's Wolfsburg headquarters on Monday, Thorsten Groger, negotiator for metal workers union IG Metall, said Volkswagen must ease their demands and begin to compromise.

"If there is no movement today, 2025 will have a troubled start," he said.

"The New Year's Eve fireworks will be followed by an escalation the company hasn't yet experienced."

The company's work council has proposed measures relating to wages and bonuses that it says would save 1.5 billion euros ($1.59 billion) and avert factory closures and redundancies. But speaking to staff last week, Volkswagen Group chief executive Oliver Blume said the proposal wasn't enough to secure the company's future and warned that urgent measures, including a reduction in labor costs and capacity, are needed.

The German car giant's chief negotiator echoed those comments Monday. In a statement before the latest round of talks began, Arne Meiswinkel said the work council's proposal is a welcome step, but doesn't go far enough.

"The fact is, Volkswagen must reduce its excess capacity. We need to reduce our factory costs, which also result from our high labor costs."

Write to Dominic Chopping at [e-mail]

(END) Dow Jones Newswires

12-09-24 0624ET