VW workers threaten strikes to fight plant closures, job losses in Germany

Volkswagen Group was threatened with strikes by IG Metall leaders as the union and VW's management started pay talks that will likely determine how aggressively the automaker pursues layoffs and plant closures in Germany.

The talks center on VW's plan to potentially shutter factories in Germany for the first time after scrapping decades-old job protections.

IG Metall said strikes are possible from the start of December, and insisted on a 7 percent pay rise.

VW's management "should circle one day in their calendars in bold: December 1st," Thorsten Groeger, IG Metall's chief negotiator with Volkswagen, told workers on Sept. 25 outside the talks venue in Hanover, Germany.

That's not just when the first window on the Advent calendar will be opened. But strikes are possible from 00:01 on this day," Groeger said.

Groeger acknowledged the automaker faced major challenges but said Volkswagen's success over decades was based on solving problems with employees, not confrontation.

"To first give notice - to smash the china and then wonder at the mess: this is a blatant taboo break - and a historic mistake. Plus it could also cost a lot of money," he said.

Major test for Blume

The dispute is a major test for VW Group Oliver Blume after union clashes felled a number of his predecessors. Blume has warned that costs in Germany are too high as demand remains weak in Europe and Chinese manufacturers push into the region.

VW has also lost momentum in China, its biggest single market, where homegrown brands dominate on electric cars.

Blume's main target is VW’s underperforming namesake passenger car brand, whose profit margins are getting squeezed amid a sputtering transition to EVs and a consumer spending slowdown.

Reinforcing that message at the start of the talks, the VW brand's personnel chief, Arne Meiswinkel, said the brand must cut costs to stay competitive.

"Germany is falling behind the competition. Our core brand Volkswagen is particularly affected by this. International competition is threatening to overtake us," he said. "We must work together to restructure our company. The situation is serious."

The task was to find viable solutions, he added.

Forced layoffs, plant closures

VW could force through decisions on plant closures this year, paving the way for more than 15,000 job cuts, analysts at Jefferies said earlier this month. The automaker is eyeing closing two to three facilities, with as many as five German sites under consideration, the analysts said.

Job cuts at VW are harder to push through than elsewhere. Half the seats on its supervisory board are held by labor representatives, and the German state of Lower Saxony — which owns a 20 percent stake — often sides with trade unions.

The first round of talks took place on Sept. 25 at the historic Herrenhausen Palace in Hanover. VW contributed to the cost of restoring the palace after it was destroyed in World War 2.

VW 's works council chief, Daniela Cavallo, went back into Volkswagen's 87-year history, referencing the expropriation of trade union funds during the Third Reich.

"With an average interest rate, this capital, which the Nazis had robbed from the labor movement at the time, would have generated billions of euros over the decades. This money, our money, is in the Volkswagen Group today," she said.

She stressed a preparedness to compromise, but added that it was now up to management to find a solution.

The talks come as Germany's industry as a whole is struggling with high costs, labor shortages and rising competition, leading heavyweights including BASF and Thyssenkrupp to consider paring back their activities.

Other German automakers are feeling the pain too, with Mercedes-Benz and BMW cutting their profit forecasts in recent weeks due to weak demand in China.

Reuters and Bloomberg contributed to this report