VW Nears Labor Deal Over Historic Strikes, Eyes Plant Preservation

After months of hard bargaining with the labor unions, Volkswagen has emerged close to striking a major deal with German unions in order to avoid subsequent mass strikes that have already twice resulted in the shutdown of production with 100,000 workers going on strike. The negotiations started in September to solve the problems concerning the penetration into Chinese markets and the unsteady growth of EV sales in the Old World.

The fifth round of negotiations has taken place at one of the Hanover’s hotels, and the latest meetings took place round-the-clock since both sides had to work hard to achieve a deal before Christmas. Reuters reveals that VW workers vehemently reject plant shutdowns and two of them pointed out that the latest negotiations entail a scenario on how to retain the plants. However, Volkswagen has indicated in the past that the shutdowns may be needed to identify about €4bn ($4.2bn) of cost cuts to deal with what it believes is structurally softer consumer demand in Europe. This development is consistent with Chancellor Olaf Schulz’s recent public call to keep every facility. However, UBS analyst Patrick Hummel has calculated that autumn may see at least 30,000 people fired in order to meet the 2026 profit targets set by VW.

The risk is high for both parties; every strike day means up to € 100 million loss in revenue for Volkswagen. The crisis has already affected some of the key players; for example, Porsche SE, the largest, with a 31.9% stake in the company, has claimed that the impairments on its holdings could amount to €20 billion.