Volkswagen, unions continue talks over plant closures and pay cuts, sources say

By Christina Amann

HANOVER, Germany (Reuters) -Talks between Volkswagen (ETR:VOWG_p) and labour unions over plant closures and pay cuts are expected to last well into Thursday as both sides have still not reached a deal, according to two people familiar with the matter.

Talks have been ongoing since Monday in hopes of reaching an agreement before Christmas to prevent massive strikes that the IG Metall union has warned could begin as early as next year.

Around 100,000 workers have already staged two separate strikes in the past month, the largest in the company’s history, protesting management’s plans to cut wages, reduce capacity, and potentially shut down German plants for the first time.

Talks could still fall apart, the sources said, requesting anonymity as the negotiations were private.

“There’s still much to do,” one of the sources said.

Volkswagen declined to comment and IG Metall was not immediately available for a comment.

Both sides remain far apart on key issues, including the potential for plant closures. Labour representatives have strongly opposed this, while the carmaker has maintained it cannot rule out the possibility.

Citing people familiar with the matter, Bloomberg reported earlier in the day that Volkswagen and labour unions were nearing an agreement to restructure the brand without closing factories in Germany.

The management is willing to keep plants running and restore job security agreements until 2030 in exchange for workers foregoing bonus payments, according to the report.

Volkswagen, Europe’s biggest automaker, is grappling with lean demand, rising costs and cheap competition from China.