Volkswagen and its main trade union, IG Metall, have agreed to commence talks on working time, labour costs and capacity utilisation in an effort to jointly improve the company’s competitiveness and safeguard jobs, and break an existing framework agreement that guarantees 100,000 jobs until 2011.
Go deeper with GlobalData
Volkswagen has been seeking a new framework agreement in the light of recent heavy financial losses, and the recognition that it has become uncompetitive. The two sides have been locked in dispute for several months about how to proceed. Earlier this year Volkswagen CEO Wolfgang Bernard said that up to 20,000 jobs at the company needed to go, particularly in (in-house) component production.
In a statement, Volkswagen said that as a prelude to the up-coming talks, the company and its works council would conclude a framework agreement on the procedure for component production and the introduction of a new work organisation at Volkswagen AG.
“Together with our employees, we want to continue moving swiftly along the road to competitive labor costs,” Volkswagen’s human resources chief Horst Neumann said in Wolfsburg on Thursday. During exploratory talks between the company and IG Metall on Wednesday, the union presented proposals for capacity utilisation at each of the six ‘traditional’ plants.
“We take the Volkswagen brand’s problems very seriously,” Hartmut Meine, local trade union representative, told dpa-AFX news.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataNeumann agreed to review the unions’ proposals with the goal of achieving appropriate capacity utilisation at all factories.
“The situation of the company has changed dramatically in recent years. Competition has become tougher, Volkswagen has been living beyond its means,” said Neumann. He added that important decisions for new products and components and thus for investments and locations were now imminent. “We cannot postpone decisions such as bringing the next major Golf upgrade to Wolfsburg.” Otherwise, the company would lose a great deal of money and lag behind the competition.
Volkswagen finance head Lothar Sander had previously explained last year’s triple-digit million losses at the six traditional plants. “These losses are one of the main reasons behind the unsatisfactory earnings situation of the Volkswagen brand,” he said.
Production chief Reinhard Jung stressed that the company was working hard to bring about a lasting improvement in the situation: “We have made significant progress, for example as regards material costs, quality, productivity and the time it takes to produce a vehicle. But that is still not enough for the competitiveness we need.”
Volkswagen said in a statement that the plant agreements discussed during the exploratory talks will also contribute to enhancing competitiveness. The components agreement aims to co-ordinate processes and organisation in component development, contract award, production and sales throughout the group. The agreement is to be implemented in the near future.
The plant agreement on “Innovative Work Organisation” is almost ready for signature. A special representative and a steering committee will ensure its introduction and implementation. This new work organisation pushes ahead with far-reaching changes in workflows and inter-departmental cooperation. The objective is to improve the productivity and quality of processes and products at all Volkswagen brand plants.
Noted Jung: “That is a key step towards increasing efficiency.”
According to the human resources chief, the company also needs a secure basis for calculating labour costs and would reach a definite agreement with IG Metall on this in September. Furthermore, there were plans to commence talks on a new joint collective agreement covering the various companies belonging to the Volkswagen brand during the second half of this year. Neumann stressed that the company was continuing to call for a return to a 35-hour week.
“If we can return to normal working hours we can plan for new vehicle models and for capacity utilisation at the component plants,” he said. It is not clear whether Volkswagen would be prepared to pay extra for a return to 35 hours. Initially it had been looking for the increase in hours with no additional pay. This is something that IG Metall has said it would not consider, and it is concerned that a return to a 35-hour week would leave some jobs surplus.
According to German press reports, the union would still be looking for job guarantees and assurances that plants would not be closed in the medium-term.
