Volkswagen’s conflict with labor risks dragging on next year
Volkswagen AG’s stalemate with labor leaders looks increasingly likely to drag into 2025, denying Chief Executive Officer Oliver Blume the fresh start he’s seeking to turn around Europe’s biggest carmaker.
Management started its fifth round of talks with the powerful IG Metall union on Monday, as the two sides remain deadlocked over how to cut costs at the namesake VW brand to make it more competitive.
“We’re very far from being able to reconcile the divergent positions,” Thorsten Gröger, lead negotiator for the workers, said ahead of the negotiations.
The messy restructuring has already thrown a wrench in the company’s investment planning, forcing Volkswagen’s biggest owner to warn of a possible non-cash impairment of as much as €20 billion ($21 billion). Volkswagen shares declined over 1% on Monday and are down more than a fifth this year.
Both sides have aimed for a deal by Christmas, but they have yet to bridge deep divides over potential layoffs and unprecedented factory closings in Germany. Volkswagen is struggling with waning demand for electric vehicles in Europe and increasing competition in China from local manufacturers led by BYD Co.
Two days of negotiations have been planned, but if those don’t yield a breakthrough, IG Metall’s board is prepared to hold a vote at the end of the week to pave the way for 24-hour walkouts across VW factories in January.
Tens of thousands of VW workers temporarily laid down their tools on two occasions this month after management had rejected a union proposal that included lowering dividend payouts and cutting some bonuses.
Arne Meiswinkel, management’s top negotiator, said there’s “urgent need for action,” adding that further cost cuts are needed to secure jobs.
The deadlock is holding back Volkswagen’s long-term investment strategy. The automaker informed Porsche Automobil Holding SE on Friday that it no longer expects to complete its corporate planning by Dec. 31. That forces the holding company to use analysts’ assumptions to conduct impairment testing on its investment in the automaker.
Porsche SE said in a filing that it assumes a negative non-cash impairment of €7 billion to €20 billion on the carrying value of its Volkswagen investment. The holding company is majority owned by the billionaire Porsche-Piëch family.