(Bloomberg) -- Volkswagen AG workers across Germany initiated walkouts on Monday after labor leaders and management reached a stalemate over how to slash costs at the carmaker’s namesake brand.
The so-called warning strikes — temporary walkouts designed to pressure management during deadlocked negotiations — are taking place at all but one of VW’s German plants, starting with the company’s flagship electric-vehicle factory in Zwickau. VW’s shares fell as much as 1.9%.
“If necessary, this will be the toughest collective bargaining battle Volkswagen has ever seen,” Thorsten Gröger, the lead negotiator for IG Metall union in the VW talks, said ahead of the rally.
VW’s management and labor leaders are at loggerheads over how to cope with a drop in demand for electric vehicles, higher operational costs and increasing competition from Chinese manufacturers. While management has said the company needs to shutter three German factories and lay off thousands of workers, union representatives have pushed to keep plants open.
The carmaker last experienced walkouts across all sites at a small scale in 2021 during the pandemic, but a larger work stoppage during wage negotiations in 2018 saw more than 50,000 workers across six factories take part.
At VW’s main plant in Wolfsburg, employees left their stations to attend a rally where works council chief Daniela Cavallo blasted management for refusing to back away from the threat of factory closures and for not supporting cuts in dividend payments as part of the savings plan.
“This warning strike is taking place to underline our legitimate demands,” Cavallo told workers gathered in front of the high-rise building housing VW executive offices. “The board should know that the crisis at VW can only be resolved alongside the workforce, and not against them.”
Cavallo took aim at the company’s executives, including Chief Executive Officer Oliver Blume, who has largely deferred any substantial role in the negotiations to brand chief Thomas Schäfer and personnel chief Gunnar Kilian. Blume “takes a stance when it suits him and says he has nothing to do with the issues at the namesake brand,” she said.
“We are unwilling to accept plant closures, mass layoffs and cuts to existing collective wage agreements,” Cavallo added.
The company is seeking a constructive dialogue to achieve a jointly supported solution, a Volkswagen spokesman said on Sunday, adding that the company has taken specific measures in response to the planned walkouts.
Volkswagen on Friday dismissed the unionists’ most recent proposals as insufficient. The €1.5 billion ($1.6 billion) in additional labor-side cost cuts included lowering dividend payouts, reducing portions of management and factory worker bonuses next year and in 2026, and putting planned wage increases into a fund to pay for possible layoffs and shift reductions.
A fourth round of negotiations is set to take place on Dec. 9, with Cavallo saying the meeting “is likely to determine the way forward: compromise or escalation.”
VW’s corporate structure gives workers a strong voice in key decisions, making it difficult for management to unilaterally 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.
(Updates with excerpts of Cavallo speech beginning in sixth paragraph.)
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