VW's lead negotiator treats the situation with gravity - IG Metall responds accordingly.
In the initial wage talks, Volkswagen's labor union rep warns employees about potential tough times. Despite this, IG Metall remains steadfast: "We aim to put an end to the negative trend." They're pushing for clear commitments on planned layoffs.
Volkswagen's HR chief, Arne Meiswinkel, has voiced concerns about the 120,000 workers before the wage negotiations. He stated, "We need to collectively transformation our company. The situation is grave," Meiswinkel mentioned in Hannover. "Global competition could surpass us. That's why immediate actions are required." The focus is on finding long-term solutions.
Originally scheduled for late October, the wage talks were moved up after Volkswagen tightened its belt early in the month. "During our first round of negotiations, it'll be about establishing a shared viewpoint," mentioned Meiswinkel. Additionally, job security guaranteed by Volkswagen will be discussed. Volkswagen remains committed to industrial work and local jobs in Germany, Meiswinkel said. But this calls for strong market competitiveness.
However, IG Metall is pressing Volkswagen for concrete job cut details at the beginning of the wage negotiations. "We want answers now," said Thorsten Groger, head of IG Metall's Lower Saxony branch and the lead negotiator. "We aim to put an end to the negative trend." Groger cited, "You don't build a future with fear – you ruin a future with fear!"
Volkswagen's works council chairperson, Daniela Cavallo, agreed, stating, "The balance between job security and economic viability is non-negotiable." Cavallo added, "Certainly, we're facing significant economic challenges. But you don't resolve them by threatening plant closures." Groger announced strong resistance. "We're just starting a confrontation with the company that will be quite a spectacle," he said. Starting December 1st, warning strikes are also a possibility. "If necessary, tens of thousands will stand in front of Volkswagen plants and on the streets." The IG Metall vehemently opposes dismissals and plant closures due to operational reasons and demands a 7% wage hike for the 120,000 Volkswagen employees at six German sites under its own tariff.
Not just Volkswagen grapples with overproduction
A Reuters examination reveals that aside from Volkswagen, many other European car manufacturers, including Ford, Renault, and Stellantis, are also dealing with the same problems. Overproduction data from analysis firm GlobalData indicates that these problems are even more severe in some cases than at Volkswagen. On average, European plants operated at 60% capacity in 2023, a decrease of 10 percentage points from their 2019 pre-Corona level.
Overproduction is prevalent in Western Europe: In Germany, France, Italy, and the UK, utilization rates dropped to 54%, contrasting with 65% before the crisis. However, in Spain, Turkey, Slovakia, and the Czech Republic, where labor costs are lower, utilization rates fell from 83% to 79% on average. The minimum utilization rate needed for a car manufacturer to profit from a plant varies depending on whether they produce high-margin luxury models or low-profit compact cars. Car manufacturers decline to comment on this.
In the industry, a 70% utilization rate is often regarded as the break-even point. Car manufacturers typically aim for an 80-90% utilization rate to run cost-effectively while also allowing for maintenance and model adjustments.
In response to the industry-wide issue of overproduction, IG Metall advocates for addressing the problem at Volkswagen first, saying, "We aim to put an end to the negative trend in motor vehicle manufacturing at Volkswagen." To maintain competitiveness and job security, Volkswagen's HR chief, Arne Meiswinkel, emphasizes the importance of manufacturing motor vehicles collectively and efficiently.
