Volkswagen told union leaders on Tuesday it was terminating collective bargaining agreements that protect workers from dismissal, a week after saying it was considering closing factories in Germany amid slumping sales and rising costs.
Facing weaker demand in Europe and abroad and growing competition from China, the company warned last week that it needed to restructure its namesake brand to stay competitive. Those measures could include closing one or two assembly plants in Germany, a first for the 87-year-old automaker.
Volkswagen said in a statement that the decision to scrap the agreement, which provides job security, along with several other labor agreements, was necessary to secure the company's future.
“Volkswagen must be in a position to reduce its costs in Germany to competitive levels in order to invest from its own resources in new technologies and products,” Volkswagen's human resources chief Gunnar Kilian said in a statement.
The collective agreement between Volkswagen and the trade union IG Metall, which covers workers in the auto and other heavy industry, has a job guarantee clause that has existed since 1994 and protected workers from dismissals until 2029. Volkswagen said the clause was valid until the end of this year and that layoffs could take effect as early as the end of June 2025.
Daniela Cavallo, head of Volkswagen's works council and member of IG Metall, vowed to fight to protect the collective bargain. “We will vigorously resist this historic attack on jobs,” Cavallo said in a statement. “With our union, there will be no firings.”
Volkswagen also said it would end other labor agreements, including one that requires it to offer permanent jobs to all of its trainees and apprentices, as well as a contract to pay temporary workers above the standard wage in the auto industry.
Volkswagen has 650,000 employees worldwide, almost half of whom are in Germany. The company and unions are due to begin new wage negotiations this autumn. The unions are seeking a 7 percent pay increase, among other demands, to avoid plant closures.
Volkswagen Group owns 10 brands, including Porsche and Audi. Last week, the company told union leaders at its Brussels plant that it has no plans to continue producing the Q8 model after 2025. If a new model can't be found, the plant will close, with the loss of 3,000 jobs.
