Volkswagen employees in Germany are planning a second round of strikes on December 9, as management and unions resume negotiations to cut costs at the automaker's flagship brand.
The IG Metall union has announced workers will go on strike for four hours at nine sites. That’s twice as long as the first work stoppage actions on December 2, and it’s expected to double the loss of production time at VW's German plants.
Tensions over cost-cutting
Volkswagen is asking workers to accept a 10-percent pay cut, saying it needs to lower costs to remain competitive in the face of Chinese competition and falling European demand.
VW executives, including CEO Oliver Blume, claim that there are at least three surplus plants in Germany and that drastic measures are inevitable. Blume told 20,000 employees in Wolfsburg on December 4 that plant closures and wage cuts were necessary to cope with a weak European market and slower-than-expected adoption of electric vehicles.
IG Metall's response
Thorsten Groeger, negotiator for IG Metall, sharply criticized Blume, saying that “It borders on mockery when Oliver Blume wishes employees a Merry Christmas while planning to place redundancy letters under the tree.”
IG Metall has promised to step up the pressure during strikes scheduled for December 9, with the aim of forcing management to make concessions during negotiations.
Under-utilized German production
According to VW CFO Arno Antlitz, the efficiency of German plants needs to be drastically improved. Speaking at a conference in London, he said that “Without improving their performance, we won't be able to maintain current employment levels.”
Bernstein analysts estimate that capacity utilization at VW's German plants has fallen to less than 60 percent over the past two decades, with an estimated overcapacity of 800,000 units.
Rallies and open strikes loom
On the morning of December 9, thousands of employees are expected to attend a rally in Wolfsburg, VW's headquarters, just before negotiations resume. If no agreement is reached, the unions are threatening to extend the strikes, which could become open-ended.