(Bloomberg) -- Volkswagen AG workers across Germany will pause production for roughly an hour on Monday to join rallies about the automaker’s plans for unprecedented factory closures in the country.
Labor leaders plan to inform employees at 11 German sites about the status of negotiations with the company. The events kick off a contentious week for Europe’s biggest carmaker, which is expected to post declining sales and profit when it reports third-quarter results on Wednesday.
VW’s board has drawn up plans for around €4 billion ($4.3 billion) in cost savings at the namesake VW brand, Handelsblatt reported over the weekend. The proposals include a universal pay cut of 10% and a suspension of wage increases for 2025 and 2026, the newspaper said, citing people familiar with the process.
Chief Executive Officer Oliver Blume has pointed to high costs at the VW brand, which is struggling with waning demand in Europe and intensifying competition from BYD Co. in China. Unionists are saying that workers are made to pay for boardroom mistakes including a botched EV shift and bad pricing policy.
Management “still hasn’t presented a coherent concept for how it wants to lead Volkswagen into the future,” Daniela Cavallo, VW’s top labor official, said in an internal newsletter seen by Bloomberg. She added that executives are unwilling to take factory closures and job cuts off the table.
The automaker has had a rough few weeks since it issued its second profit warning in three months in late September. While its premium brands including Audi and Porsche have been the carmaker’s biggest source of profit in recent years, they’re now struggling. Porsche AG on Friday said it’s weighing cost cuts and reviewing its model lineup after a demand slump in China hit its profits.
Negotiations have so far produced no results. A grace period will run out next month, with warning strikes at VW sites in Germany possible from Dec. 1.
(Updates with details on cuts in third paragraph)
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