The car crisis

Volkswagen agreement: closures avoided, but 35,000 exits by 2030

Ig Metall: 'There will be no compulsory redundancies'. The company: the reduction of the workforce will take place in a 'responsible' manner. One factory will be sold and one reconverted. The production capacity of the German plants will be reduced by more than 700,000 vehicles. Scholz: 'Good and socially acceptable solution'

by Gianluca Di Donfrancesco

19 December 2024Aggiornato il 20 dicembre 2024, ore 19:22

Una manifestazione del sindacato Ig Metall contro i tagli minacciati da Volkswagen

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No redundancies and factory closures, but 35,000 'socially responsible' redundancies and capacity cuts. What began on Monday 16 December and ended on Friday 20 was the longest round of negotiations in Volkswagen's history, coming to an end after 70 hours of talks in a Hanover hotel. The latest chapter in the most dramatic dispute, opened in September by the company with the threat to close up to three plants in Germany, which has never happened in the group's 87-year history.

Ig Metall: "Christmas Miracle"

Both sides look at the half-full glass of the compromise, which could not be painless. For Ig Metall, the agreement is a 'Christmas miracle', precisely because there will be no immediate site closures, compulsory redundancies or wage cuts. However, there will be major reductions in employees' bonuses. Who, in return, will be guaranteed employment until the end of 2030. The old agreement, made in 1994 to suspend collective redundancies, had been revoked unilaterally by the company. It was to expire in 2029.

As proposed by the union in November, the 5% pay increase that would have been due to employees will not go into their pay envelopes, but will go into a fund, which will be used to finance the reduction of flexible working hours for part of the workforce. The company had demanded a 10% reduction in wages.

"No sites will be closed, no one will be laid off for operational reasons, and our company wage agreement will be guaranteed for the long term. With this three-way agreement, we have reached a solid solution under the most difficult economic conditions,' said works council president Daniela Cavallo of Ig Metall.

Blume: "Important signal"

The company stated that the agreement includes provisions to reduce more than 35,000 jobs in a 'socially responsible' manner by 2030, out of around 120,000 in total, and the production capacity of the German plants will be reduced by more than 700,000 vehicles. This is the price to be paid for the sales crisis. It is part of the solution to deal with the overcapacity of the Volkswagen plants, admitted Thorsten Gröger, chief negotiator of Ig Metall.

'After long and intensive negotiations, the agreement is an important signal for the future viability of the Volkswagen brand,' said group CEO Oliver Blume in a statement.

That factory closures could be foiled had already emerged on Thursday 19. Two plants were left in the balance: the one in Dresden, only opened in the early 2000s, will be converted and vehicle production will be discontinued; for the one in Osnabrück a buyer will be sought. According to the Handelsblatt newspaper, the plant could be taken over by a defence or recycling company.

The Plan

In order to keep all plants open, the activity will be reduced to five plants: an assembly line in Zwickau will be closed and in future, only Audi's Q4-etron electric car will be built at this site, which will be converted to car recycling. The compact electric VW ID.3 and the Cupra Born will be transferred to Wolfsburg, where the electric Golf will also be produced in future. The ID.4 will go to Emden. The current Golf will instead be moved from Wolfsburg to Mexico.

The agreement defuses the threat of escalation by the unions, which had promised unprecedented protests if an agreement was not reached by Christmas. More than 100,000 workers had joined the warning strikes on 9 and 16 December.

Politics at the window

Politics can breathe a sigh of relief. The Volkswagen crisis, emblematic of the general weakness of German industry, had contributed to the difficulties of the Semaphore coalition, which imploded on 6 November. If the dispute had dragged on into 2025, it would certainly have affected the election campaign ahead of the February vote.

For the chancellor, Olaf Scholz, Volkswagen and the unions have found a 'good and socially acceptable solution, which guarantees the group and its employees a positive future'. In the past few days, Scholz had stated that closing factories 'would not be right, as the bad choices of managers contributed to the crisis'.

Gianluca Di Donfrancescoredattore
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