By Christina Amann
HANNOVER (Reuters) – Volkswagen introduced sweeping adjustments to its operations in Germany on Friday, together with greater than 35,000 job cuts and steep capability cuts as a part of a last-minute deal between Europe’s high carmaker and unions to keep away from mass strikes.
Union leaders hailed the deal as a “Christmas miracle” after 70 hours of grueling negotiations, the longest within the firm’s 87-year historical past. There could be no fast plant closures or layoffs, and VW seems to have given up on demanding 10% pay cuts.
The settlement to keep away from pricey strikes may additionally present reduction to buyers after months of negotiations. Shares rose 2.4% in prolonged buying and selling after the deal. They’ve misplaced 23% this 12 months.
Volkswagen (ETR:) has been in talks with union representatives since September over measures it says are essential to compete with cheaper Chinese language rivals and handle lackluster demand in Europe and slower-than-expected adoption of electrical autos.
Round 100,000 staff have already staged two separate strikes final month, the most important in Volkswagen’s historical past, to protest cost-cutting plans.
“Because of the entire measures which have been agreed, the corporate has set a decisive course for its future when it comes to prices, capacities and constructions,” Volkswagen Group CEO Oliver Blume mentioned in a press release.
“We are actually as soon as once more in a position to efficiently form our personal future.”
VW mentioned the deal would save 15 billion euros a 12 months within the medium time period and noticed no important affect on its 2024 forecast. Though there have been no fast closures, VW mentioned it was exploring choices for its Dresden plant and the reconversion of the Osnabrück web site, together with searching for a purchaser. A part of the manufacturing could be transferred to Mexico.
Automobile manufacturing is predicted to be closed on the Dresden plant by the top of 2025. VW AG employees is not going to obtain wage will increase underneath a collective settlement over the subsequent 4 years, whereas some Premiums shall be eradicated or diminished.
Manufacturing at VW’s Wolfsburg plant, the most important, shall be diminished to 2 meeting strains as an alternative of 4.
“No web site shall be closed, nobody shall be made redundant for operational causes and our firm wage settlement shall be assured in the long run,” mentioned works council president Daniela Cavallo.
SPEAK IN THE NIGHT
The fifth spherical of negotiations has been underway since Monday and continued late into the night time in Hanover this week, with negotiators taking solely quick breaks to sleep and replenish on espresso, curry sausages and fruit.
The upcoming 35,000 job cuts would symbolize round 1 / 4 of VW’s workforce and could be accompanied by a discount within the group’s German manufacturing facility community of greater than 700,000 autos.
IG Metall’s chief negotiator, Thorsten Groeger, however mentioned the cuts, which might not contain obligatory layoffs, had been a part of an answer to handle overcapacity and could be carried out in a socially accountable method.
Matthias Schmidt, analyst of European automotive markets, mentioned: “35,000 job losses over a demographic curve till 2030 will most likely not be sufficient, and over too lengthy a interval, to treatment the present stagnation we’re seeing. on the European market. »
He added: “I’d say the unions can get extra out of it than VW, however realistically, due to the complicated construction of the corporate, that was most likely the very best they might moderately hope for.”
Main shareholder Porsche SE hailed Friday’s deal as a “important enchancment in Volkswagen’s competitiveness”, including that it was now essential to implement the cuts.
CAMPAIGN ISSUE
The talks befell in an old school, no-frills enterprise lodge on the outskirts of Hanover, the place delegates from each side met over a number of conferences typically interrupted by breaks throughout which they refueled on espresso. and fruit effectively after midnight.
Some staff performed playing cards to unwind.
The disaster at VW comes at a time of uncertainty and political upheaval in Europe’s largest economic system, in addition to broader unrest among the many area’s automakers.
The query of easy methods to handle Germany’s weak progress took heart stage within the election marketing campaign forward of February’s snap elections, whereas Chancellor Olaf Scholz, lagging within the polls, urged VW to maintain all its factories open.
Scholz praised Friday night as a “good, socially acceptable resolution,” including in a press release: “Regardless of all of the difficulties, it ensures that Volkswagen and its staff can hope for a greater future.”
Alexander Krueger, chief economist at Hauck Aufhaeuser Lampe Privatbank, mentioned at first look it was a compromise the events may dwell with.
“Different corporations are additionally pursuing job reduce plans, and VW seems to be just the start,” he mentioned. “Aggressive pricing strain will seemingly require additional changes at a later date.”
Former Volkswagen bosses, together with Herbert Diess and Bernd Pischetsrieder, failed of their makes an attempt to deliver sweeping adjustments to the Wolfsburg-based automaker as unions held agency.
IG Metall’s strike threats had been a robust bargaining chip. UBS estimates that every day of strike motion in Germany may have price VW as much as 100 million euros in income and round 20 million euros in working revenue, based mostly on 2,000 to three,000 autos. fewer merchandise per day.
($1 = 0.9579 euros)
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