VW and workers face off in second round of talks over pay and plants

WOLFSBURG, Germany (Reuters) – Volkswagen (ETR:VOWG_p) and its powerful unions will lock horns on Wednesday for a second time over management plans for plant closures and mass layoffs, as Europe’s biggest automaker battles to cope with high costs and growing competition.

The talks at the German group’s Wolfsburg headquarters come as it releases third-quarter results, which are also likely to highlight the weak demand that has contributed to a crisis that comes less than a decade after its dieselgate emissions scandal.

Management wants to close plants in Germany – at least three of them – for the first time in the company’s history, while also cutting tens of thousands of jobs and reducing wages by at least 10%, according to labour leaders.

The plans have sent shockwaves through Europe’s biggest economy as it grapples with anaemic growth, above all in its industrial heartlands.

Works council head Daniela Cavallo earlier this week threatened to break off talks, raising the risk of strikes, saying Volkswagen management had ended a long-standing consensus-driven approach to its relationship with workers.

Unions cannot hold wider strikes until December as part of a previously agreed truce, but labour leaders have repeatedly threatened that workers would do what’s in their power to prevent what they consider to be a breaking of taboos.

Wednesday’s talks are scheduled to start at 1100 CET (1000 GMT), and Volkswagen earlier this week said it would table proposals for how to tackle the current malaise.

Management says the German plants are way more expensive to operate than the competition, driven by high costs for workers and energy, while Europe’s car market has shrunk from pre-pandemic levels and once robust demand in China has waned.