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an "earthquake" in german manufacturing? volkswagen sparks labor-management dispute again after factory closure plan

today, key negotiations between volkswagen and the trade union ig metall officially started. the union firmly opposes the factory closure and requires the company to defend the rights of employees.

earlier this month, media reported that volkswagen was considering closing its factories in germany for the first time and abolishing wage agreements to further cut costs due to cost pressures.

the market is concerned about whether the two sides can reach an agreement on the negotiations, because this is related to the future development of volkswagen. if the negotiations fail, the union may take actions such as strikes, which will have a huge impact on volkswagen and even the german manufacturing industry.

volkswagen and unions in intense negotiations, with job security at the center of the discussion

a standoff between volkswagen's unions and company executives unfolded on wednesday, focusing on job security and factory closures.

volkswagen, facing tough challenges due to high costs and fierce competition, has said it may close german factories for the first time, including a large car factory and a parts plant, and may also try to terminate the company's job security agreement with unions, which aims to protect employment until 2029.

volkswagen ceo oliver blume said in a statement:

“the environment has become more severe, new competitors are entering europe, and germany is falling further and further behind in terms of competitiveness.”

the union ig metall is firmly against the closure of the factory and is committed to protecting the rights of employees. the union president daniela cavallo will speak on behalf of the employees and vow to defend their jobs.

cavallo is known for being patient but persistent, and "she's just as tough when it comes to business," msn news said, citing a person familiar with the matter.

to complicate matters, ig metall must also sign a new labor agreement for the 130,000 workers employed by volkswagen's core brand, which has protected jobs at six major production plants in western germany since the mid-1990s.

this is perhaps the most contentious labor negotiation of cavallo's tenure, with tensions between unions and management rising sharply and all eyes on the progress of the negotiations and their far-reaching impact on germany's auto industry.

earlier this month, shortly after volkswagen informed employees of the potential plant closures, cavallo expressed her disappointment, saying:

"unfortunately, i must admit this is the darkest day so far."

germany's manufacturing industry is facing a more severe crisis, and companies are clearly pessimistic

volkswagen insists such moves are inevitable given tough market conditions and the high cost of doing business in germany.

volkswagen has expressed concern that rising energy and labor costs in germany are putting it at a disadvantage to other european competitors. in addition, the rise of electric vehicles in china has also brought a lot of impact, and automakers are actively trying to expand their share of the european electric vehicle market.

the pressure is felt across germany’s auto industry, which has seen mercedes-benz and bmw both issue profit warnings as they grapple with sluggish sales.

germany's industrial sector, including giants such as basf and thyssenkrupp, is grappling with similar challenges. soaring costs, coupled with labor shortages, have forced several large companies to scale back or even consider a partial exit from overseas markets.

pmi data released by s&p global and hamburg commerzbank (hcob) on monday showed that germany's manufacturing woes have worsened, with customers becoming more cautious and related investment declining.

excluding the first few months of the pandemic, german companies as a whole are cutting jobs at the fastest pace in 15 years. pessimism is evident among businesses, including fears of a recession, market uncertainty and weakness in the automotive and construction sectors.