Volkswagen announced a “Christmas miracle” with sweeping changes to its German operations but no immediate factory closures, layoffs, or wage cuts. Still, some 35,000 jobs are on the chopping block soon, but factories should remain open.
This week, Bloomberg reports that Volkswagen and union leaders came to a deal after 70 hours of negotiations, and following five rounds of talks and two major strikes at the automaker’s German factories in the past month, involving some 100,000 workers, the largest in the company’s history.
VW said it would agree to keep its 10 German factories up and running and reinstate job security agreements until 2030, according to the report. However, workers agreed to forgo some bonuses, reduce permanent employment for trainees, and cut capacity at five factories for a total of about 700,000 vehicles.
The automaker will also cut more than 35,000 jobs in Germany by 2030, but do so in a “socially responsible manner.” The cuts are meant to save roughly $4.2 billion per year over the medium term, Bloomberg reports.
Volkswagen AG managers are also facing hefty pay cuts in the coming years, with about 4,000 managers forgoing bonuses equal to about 10% of their annual income next year, with small reductions through the end of the decade. However, top executives, including CEO Oliver Blume, don’t seem to be factored into the job cuts. But Bloomberg reports that unions are pushing for senior leadership, too, to take a 10% pay cut.
This comes at a time when VW is radically restructuring its business to slash costs, while seeking to streamline production and development processes, shaving off months on the development cycles of specific projects to help tighten the belts, all while rethinking its EV retail model to stay more competitive. Volkswagen has been facing a steep decline in sales in China, which is its core market, while simultaneously facing challenges from BYD and other Chinese automakers entering the European market.
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