(Bloomberg) -- Volkswagen AG workers across Germany plan to stage mass walkouts starting early next month after labor leaders and management failed to reach an agreement over how to slash costs at the carmaker’s namesake brand.
Warning strikes will start before the next round of talks, which is scheduled for Dec. 9, Thorsten Gröger, the IG Metall union’s lead negotiator, said Thursday in Wolfsburg, Germany.
“The difference between the positions is still massive, and therefore we will use our options to put more pressure on the negotiation process,” Gröger said.
VW’s management and labor leaders have been at loggerheads over how to cope with a drop in demand for electric vehicles, higher operation costs and increasing competition from Chinese manufacturers. While management has argued the company needs to shutter three German factories and lay off thousands of workers, union representatives have pushed to keep plants open.
Volkswagen’s preferred shares declined 0.6% in Frankfurt. They’re down around 27% this year.
Thursday’s talks — the third round in the negotiations — did make some progress after unionists on Wednesday proposed a €1.5 billion ($1.6 billion) cost-saving package that includes foregoing some bonuses.
“We view it as a positive signal that the employee representatives have shown openness to reducing labor costs and capacity reductions,” VW’s lead negotiator Arne Meiswinkel said.
Volkswagen is pushing for deep savings at its namesake brand, which is struggling with poor electric-vehicle sales and waning relevance in China, the world’s largest auto market. Chief Executive Officer Oliver Blume is trying to reduce expenses in Germany, where labor and energy costs are among the highest in Europe. Management during the talks floated measures including selling several factories in Germany.s
In Germany, unions often organize warning strikes — which are temporary walkouts — to put pressure on management when wage negotiations are deadlocked. Labor leaders are aiming for clarity as quickly as possible so they can inform workers before Christmas what a possible restructuring may look like, Daniela Cavallo, VW’s top labor official, told reporters ahead of the talks on Thursday.
VW’s corporate structure gives workers a strong voice in key decisions, making it difficult for management to push through painful cost cuts. Employee representatives occupy half of the company’s supervisory board seats, while VW’s home state of Lower Saxony holds an additional two seats.
More than 7,000 workers from VW’s German factories rallied in Wolfsburg prior to the negotiations, offering a preview of the kind of protest action management faces if no deal is reached.
(Updates with shares in fifth paragraph. A previous version of this story corrected the date of the next round of talks in the second paragraph.)
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