Volkswagen cuts job guarantees at six German plants amid negotiations

Volkswagen has informed the IG Metall trade union that it is terminating labor agreements that included job security at six of its German auto plants, a decision made amid ongoing negotiations. This move comes as the company faces intense competition in the electric vehicle market, particularly from lower-cost Asian manufacturers. CEO Oliver Blume emphasized the need for cost reductions to maintain competitiveness, with plans to save over 10 billion euros by 2026. The cancellation of job guarantees, which have been in place for decades, is part of a broader cost-cutting strategy. The head of Volkswagen's works council, Daniela Cavallo, has expressed strong opposition to potential layoffs and plant closures, attributing the company's challenges to ineffective upper management. As negotiations with IG Metall were set to begin in October, the union had previously suggested a four-day workweek as a potential alternative to plant closures, reflecting strategies used successfully in the past. The urgency of the situation is underscored by warnings from Volkswagen's finance chief about the limited time available to adapt to the competitive landscape posed by Chinese electric vehicle manufacturers. The implications of these developments are significant, as they not only affect the workforce but also the company's long-term viability in a rapidly evolving automotive market. Analysts predict further adjustments to Volkswagen's profit margin targets, indicating ongoing financial pressures as the company navigates these challenges.