VW rejects union cost-cutting proposals
The car-maker has been struggling to rein in costs, demanding a 10% wage cut from workers. Picture: AP /Jens Meyer
Under pressure from high costs and Chinese competition, German car giant Volkswagen rejected union proposals for cost savings on Friday, just days ahead of planned walkouts meant to avoid unprecedented plant closures.
"Although there may also be positive effects in the short term, the measures will not lead to any sustainable financial relief for the company in the coming years," the company said in a statement, adding it would remain in contact with labour representatives.
Germany's powerful IG Metall union this month proposed €1.5bn in cost savings, including forgoing bonuses for 2025 and 2026.
"Sustainable savings of €1.5bn cannot be ascertained even after intensive analysis," the company said.
A Volkswagen source dismissed the union's proposals, saying they were intended to buy time the company does not have.
"New discussions in an even more difficult environment would be necessary by 2026 at the latest," the source said, adding some of the proposals were not legally feasible.
Volkswagen has demanded a 10% wage cut, arguing it needs to slash costs and boost profit to defend market share in the face of cheap competition from China and a drop in European car demand.
It is also threatening to close plants in Germany for the first time in its 87-year history.
The union reiterated its cost-cutting proposals in response to the Volkswagen statement.
"IG Metall has taken a huge step towards Volkswagen's management in the negotiations", it said, adding the company had failed to provide an answer as to what steps it was prepared to take towards its employees.
A complex organisational structure, misjudged investments, poor management decisions, weak demand in Europe and China, high costs, and Germany's bureaucracy have all been blamed for Volkswagen's problems in its home market.
Executives have said they do not expect the demand for cars in Europe seen before the pandemic to return, leaving the company with excess and expensive production capacity.
IG Metall earlier on Friday said Volkswagen workers could go out on strike across Germany as soon as next week, escalating the clash with management.
