Germany: Volkswagen prevents factory closures, ensures job security until 2030
What's the story
Volkswagen has managed to strike a deal with the IG Metall union, ensuring that none of its German factories will be shut down.
The deal protects all 10 Volkswagen plants in Germany and guarantees employment for workers until the end of 2030.
According to The New York Times, as part of this deal, the union has also dropped its demand for a wage increase until 2031.
Job assurance
Union leader confirms job security and wage agreement
Volkswagen's head of works council Daniela Cavallo confirmed the positive outcome of the negotiations.
She said, "No site will be closed, no one will be made redundant and our company wage agreement will be secured for the long term."
The announcement comes after a long dispute over Volkswagen's future operations in Germany as sales and demand continue to decline.
Job cuts
Volkswagen plans to cut 35,000 jobs
Despite the agreement to keep all factories operational, Volkswagen has announced plans to cut 35,000 jobs, Autocar reported.
The company currently employs some 120,000 people in Germany, and intends to bring this number down over the next five years. This will be done via early retirement packages and other voluntary measures.
Factory changes
Repurposing of factories
As part of this agreement, Volkswagen plans to repurpose two of its factories.
Earlier, there were speculations about possible closures of the Dresden facility (where ID.3s are manufactured) and the Osnabruck plant that produces Porsche 718.
However, these rumors have been dispelled despite decreasing market demand for EVs and the discontinuation of 718 production.
Cost reduction
Volkswagen's cost-cutting measures and production shifts
Along with job cuts, Volkswagen is mulling other cost-reduction strategies.
These include moving the production of the Golf hatchback from Germany's Wolfsburg plant to Mexico, and halting the production of Volkswagen-branded electric vehicles in Zwickau to cut capacity.
The company also intends to move the manufacturing of its ID.3 hatchback and ID.4 SUV from Zwickau to Wolfsburg and Emden, respectively.
Future plans
Potential car recycling project and new electric Golf
To make up for the lost capacity, a car recycling project that could generate as many as 1,000 jobs is being planned for Zwickau.
Wolfsburg will manufacture Volkswagen's new electric Golf, which will be built on an architecture developed with Rivian Automotive Inc., and will be ready by 2028.
These plans are all part of Volkswagen's larger strategy to adapt its operations to market changes.