Volkswagen Reaches Labor Deal, Avoiding Germany Plant Closures

Volkswagen, Germany’s largest automaker, reached an agreement with its union on Friday, ending a three-month standoff that had rattled the country and brought to light the extent of German industrial decline.Under the deal, hammered out during more than 70 hours of talks, the company agreed to keep all 10 of its factories in Germany open and to guarantee workers’ jobs until the end of 2030.In exchange, the union, IG Metall, which represents most of Volkswagen’s workers, withdrew its demand for a wage increase until 2031.“No site will be closed, no one will be made redundant and our company wage agreement will be secured for the long term,” Daniela Cavallo, the head of the works council at Volkswagen said in a statement announcing the agreement.At stake was not just wages but the basis for how Volkswagen plans to solve the problem of too many workers and too few orders, amid slumping demand in Europe and abroad and increasing competition from Chinese automakers.

In the end, the two sides agreed to a compromiseThe struggles strained the 87-year-old company’s strong ties with its roughly 120,000 workers in Germany, who said that management had betrayed the social pact of the country’s traditional collective bargaining system, where the welfare of the company and its employees are given equal weight.IG Metall staged brief walkouts in December, but had threatened to start longer strikes starting in January if an agreement had not been reached.That pressure, combined with Volkswagen’s plunging share price, which has fallen by more than a third over the past 12 months, was enough to force the company to back down from its threats to close as many as three plants.Volkswagen had also sought a 10 percent wage cut from its roughly 120,000 workers in Germany.This is breaking news.

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