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Volkswagen and the IG Metall Union have reached a compromise, ending a labor dispute that has been simmering for months. Volkswagen has been producing extra automobiles than there have been clients for — a scenario that was papered over for some time by income from its operations in China. However issues haven’t been going nicely in China lately, as Chinese language clients have expressed a transparent choice for home manufacturers. With out these income, Volkswagen discovered itself between a rock and a tough place. In response, it proposed closing three factories in Germany — one thing that despatched shock waves via all the nation.
Such a factor had by no means occurred earlier than and the union was in no temper for the fallout these plant closures would carry. If the dispute had continued previous the Christmas vacation, the end result might have been widespread strikes within the new 12 months. After loads of posturing by each side and marathon bargaining classes that prolonged into the wee hours of the morning, the 2 sides have agreed to chop 35,000 jobs by 2030 and scale back manufacturing capability in Germany by greater than 700,000 automobiles. In response to Electrive, electrical automobiles will probably be included in these manufacturing cuts.
In a press launch, Volkswagen stated it’s positioning itself competitively for the longer term. With the collective settlement on the in-house wage settlement, the corporate is creating circumstances for a discount in annual labor prices of €1.5 billion by 2030. Manufacturing reductions and growth price financial savings are anticipated to end in a further €4 billion in financial savings within the medium time period, serving to the Volkswagen model obtain its profitability targets.
Volkswagen plans to remove redundancies in its labor drive. Though, present workers are assured jobs till 2030. The discount within the variety of workers will occur largely via attrition, as workers who retire or depart the corporate is not going to get replaced. Extra financial savings measures embody cuts to bonuses and revenue sharing. To achieve the settlement with IG Merall, the Volkswagen board withdrew its demand for a ten % wage discount. As an alternative, the union’s proposal for a “Future Fund,” which was beforehand rejected as “inadequate” by the board, has been adopted as a part of the compromise. In response to Handelsblatt, “a pay enhance of simply over 5 per cent — just like agreements within the metallic and electrical industries — will probably be paid right into a fund in two levels slightly than workers’ accounts.” This fund will probably be used to finance versatile reductions in working hours for some workers.
As for the areas the place jobs will probably be reduce, just one division has been particularly recognized. Volkswagen introduced that “to speculate extra in improvements, the Technical Improvement division will probably be reorganized. By leveraging group synergies, the competitiveness of Technical Improvement will probably be sustainably strengthened.” As a part of this restructuring, roughly 4,000 jobs will probably be reduce by 2030.
Rearranging Manufacturing At Volkswagen
A lot of agreed mannequin shifts between factories had been detailed in a press release by IG Metall. Manufacturing of the ID.3 and Cupra Born will probably be transferred from Zwickau to Wolfsburg. The ID.4 will probably be solely relocated to Emden. The manufacturing facility in Zwickau will probably be left with just one mannequin to construct — the Audi This autumn e-tron. With just one mannequin being constructed there sooner or later, Zwickau will possible wrestle to stay worthwhile.
The gasoline powered Golf and its wagon variant, that are at present assembled in Wolfburg, will probably be manufactured within the Puebla manufacturing facility in Mexico starting in 2027. Wolfsburg will manufacture the upcoming ID.Golf, which relies on the SSP platform. The ID.4 will probably be manufactured alongside the ID.7 and ID.7 Tourer in Emden. Moreover, a call will probably be made in 2027 relating to the allocation of one other mannequin. In Hanover, the manufacturing of the T7 Multivan and ID. Buzz will proceed. “Thus the relocation plans of the administration have been thwarted,” writes IG Metall. Nonetheless, “particular measures to sustainably scale back manufacturing facility prices” have been agreed upon, the corporate says.
Whereas Emden and Hanover are safe, two smaller areas don’t have any future. Manufacturing within the Glass Manufacturing facility in Dresden, the place Volkswagen builds electrical automobiles based mostly on the MEB platform on a small scale, will finish in late 2025 and that location will probably be “repurposed.” The Osnabrück plant, which was not scheduled to supply a car after 2026, is to be offered. In response to info from Handelsblatt, the previous Karmann plant “might go to a protection or recycling firm.” One mannequin that neither the corporate nor IG Metall has talked about is the ID.5. It’s not being produced in Zwickau and isn’t listed among the many fashions slated for manufacturing in Emden. It’s doable the ID.5 will probably be discontinued, Electrive says, however this isn’t but confirmed.
Volkswagen had stated it could shut as much as three factories, and the smaller websites in Dresden and Osnabrück had been early contenders for closure. If a 3rd manufacturing facility was included on the closure checklist, one of many bigger car or part factories would have been included. Beneath the brand new settlement, the part crops stay safe. Kassel has obtained commitments for electrical mobility parts. In Salzgitter, a call on when to start manufacturing on the second part of the PowerCo battery cell manufacturing facility will probably be made no later than Planning Spherical 74 in 2026.
“After lengthy and intense negotiations, the settlement is a crucial sign for the longer term viability of the Volkswagen model, Volkswagen Industrial Automobiles, and the parts crops,” stated CEO Oliver Blume. “With the achieved bundle of measures, the corporate has set decisive steps for its future by way of prices, capacities, and constructions. The board and administration are taking part disproportionately.”
Each Sides Declare Victory
“For the way forward for the Volkswagen model, we now have set ourselves three priorities — decreasing overcapacity in Germany, decreasing labor prices, and attaining aggressive growth prices,” stated VW Model chief Thomas Schäfer. “The negotiations have led to viable ends in all three areas. With the agreed measures bundle, we’re capable of largely shut the hole in our efficiency program.”
Daniela Cavallo, who chairs the Volkswagen AG Works Council, stated, “No website will probably be closed, nobody will probably be made redundant, and our in-house wage settlement is secured in the long run. With this threefold method, we now have fought for a rock stable resolution below essentially the most difficult financial circumstances. Though there are collective concessions past month-to-month incomes, these are offset by the solidarity pushed retention of all websites with future prospects, a brand new job safety plan till the top of 2030, and the reassurance for the administration that at Volkswagen, modifications in opposition to the desire of the workforce are doomed to fail.”
Handelsblatt describes the deal as a “breakthrough” for Volkswagen Group CEO Oliver Blume, “as additional steps for the crucial planning spherical within the group can now be taken.” The present planning spherical was initially scheduled for November however was postponed because of the wage dispute. In these planning rounds, Volkswagen allocates investments for the following 5 years and determines the distribution of fashions throughout its greater than 100 factories worldwide. Now {the marketplace} should resolve if Volkswagen will stay each related and worthwhile sooner or later.
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