Volkswagen reaches deal with union to keep German plants open

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Carmaker Volkswagen has walked back on its threat to close several German plants, striking a deal with its powerful works council that will save €4bn annually and stave off the risk of further strikes.

After more than 70 hours of negotiations with Europe’s largest carmaker, the works council said late on Friday that the union had reached a deal that meant “capacity reduction for the German factories, but no closures”.

“No site will be closed, no one will be made redundant and our in-house collective bargaining agreement will be secured in the long term,” said Daniela Cavallo, leader of the VW works council.

The works council, which controls half of seats on VW’s supervisory board, said capacity at five of the VW flagship brand’s German factories would be reduced by 734,000 units annually but added there would be no lay-offs.

VW, meanwhile, said the deal would allow it to cut 35,000 jobs by 2030 “in a socially responsible manner” — meaning that the company will not replace workers who retire or accept a voluntary redundancy package.

The deal is far cry from what VW had initially said was demanded. In September the company had warned that structurally lower sales in Europe — it sells roughly 500,000 fewer cars annually in its home region compared to before the pandemic — corresponded to a need to close “at least” three German factories.

On Friday, VW chief executive Oliver Blume called the agreement an “important signal for the future viability of the Volkswagen brand”.