Negotiating committees representing Volkswagen AG and the IG Metall trade union have started pay negotiations with a meeting in Hanover, home to the automaker’s main commercial vehicles plant.
VW’s chief negotiator, Martin Rosik, who heads human resources at Volkswagen Passenger Cars, said: “2013 is a difficult year, there are no signs of a recovery. Volkswagen must face up to developments on the European market, competitiveness must not be compromised. A moderate pay agreement is therefore even more essential than in previous years.”
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“There has been a dramatic deterioration in the situation on the European automobile market”, Rosik added. “We explained our analysis to IG Metall and will now be seeking the right answer to tougher competition together with the employee side.”
“It is precisely on our home market of Europe that we are facing a dramatic drop in demand,” he said. “The automobile markets in Italy, Spain, Portugal and Greece have been cut by more than half compared with 2007. The market in Europe has contracted by almost one quarter and there are no visible signs that could give us cause for optimism. Record unemployment, falling wages and government austerity measures are stifling the mood of consumers in many European countries and weakening the economy further.
“For automakers that rely to a large extent or exclusively on the European market, the situation is threatening. They are fighting a bitter price battle for market share.”
He added that Asian carmakers are conducting an aggressive offensive to launch models produced with much lower labour cost in the far east as well as central and eastern Europe.
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By GlobalData“They manufacture vehicles much more cheaply than we can at our German plants,” Rosik said. “Labour costs in the Korean automobile industry, for example, are only one third of the level in Germany. The situation is further aggravated by this competitive disadvantage.
“Volkswagen will continue to make cars in Germany. However, given the dramatic situation we will only succeed in that if we find the right answers together with the employee side.”
The collective agreement at VW AG covers 102,000 employees at plants in Wolfsburg, Brunswick, Hanover, Salzgitter, Emden and Kassel as well as Volkswagen Financial Services.
Negotiations are set to continue on 27 May.
