Silke Mayr Volkswagen and the IG Metall union have struck a deal to avert closures of German manufacturing plants. The agreement ensures no immediate compulsory redundancies, securing jobs and protecting investments for the future.
Job Cuts and Economic Adjustments
Despite avoiding plant closures, the agreement includes plans to cut over 35,000 jobs by 2030. The reductions will occur in a “socially responsible manner,” primarily through early retirement programs. These measures aim to save Volkswagen approximately €15 billion (£12.4 billion).
Germany’s largest carmaker previously warned it might need to close up to three plants to reduce costs. After months of negotiations starting in September, the union and Volkswagen succeeded in finding a compromise. IG Metall’s works council chief, Daniela Cavallo, described the agreement as a “rock-solid solution under difficult economic conditions.”
The deal also involves suspending a previously agreed 5% wage increase in 2025 and 2026. This decision will help support Volkswagen’s transformation efforts. Additionally, the number of annual apprenticeships in Germany will be cut from 1,400 to 600 starting in 2026.
Broader Impacts and Future Outlook
Volkswagen plans to shift some production to Mexico and explore alternative uses for its Dresden and Osnabrück sites. Despite these adjustments, union leaders celebrated the deal, emphasizing that no plants will close and operational layoffs are avoided.
VW’s CEO, Oliver Blume, called the agreement “an important signal for the future viability of the Volkswagen brand.” Chancellor Olaf Scholz also welcomed the news, describing it as a “good, socially acceptable solution.”
The agreement follows a decline in demand for VW’s cars in China, one of its key markets. At the same time, Chinese car brands have increased competition in Europe. To pressure management during negotiations, around 100,000 workers participated in warning strikes at various sites.
Negotiators were determined to finalize the deal before Christmas, bringing months of discussions to a successful close. Factory closures would have been unprecedented in Volkswagen’s history, making this agreement a significant milestone for the company.