VW and workers lock horns over layoffs as profits plummet

Workers are unhappy about reported plans for the closure of three factories and mass layoffs

Volkswagen and unions are set for talks over management plans for plant closures and mass layoffs. The talks come as Europe's biggest car manufacturer reported a profit slump due to high costs and growing competition.

Car giant Volkswagen and labor leaders were set for talks on Wednesday, as company bosses said they would table proposals to tackle high costs and growing competition.

The discussions come on the same day VW announced a 64% plunge in profits and amid concern about widespread job cuts.

What the sides are saying

VW management wants to close at least three plants in Germany, while also cutting tens of thousands of jobs and cutting wages by at least 10%, union leaders say.

The plans have shaken Europe's biggest economy as it struggles with stuttering growth.

Unions raised the prospect of strikes unless VW rules out plant closures from its restructuring plan, with labor and management also at odds over pay.

Ahead of the second round of wage dispute and layoff talks, VW negotiator Arne Meiswinkel pointed out the company's difficult situation, saying Europe's auto industry faced critical challenges.

"We now need joint and consistent action to find a viable and sustainable solution in the interests of our workforce and our company," Meiswinkel said.

Volkswagen CEO Oliver Blume cited new competitors in European markets and Germany's worsening position as a manufacturing location as reasons for the need to "act decisively."

The talks on Wednesday were with the powerful IG Metall union, which is seeking a 7% pay rise for employees.

Employee council chief Daniela Cavallo has pledged to resist layoffs, which she said were the beginning of VW's plans for a "sell-off" of the industry in the company's home country.

Earlier this week, Cavallo threatened to end talks, claiming that management had ended an established consensus-driven approach to employ relations.

The Volkswagen Group also includes auto brands such as Audi, Seat and Skoda, as well as commercial vehicle brands such as MAN and Scania.

Tough times across the car sector

Germany's auto giants are facing increasing competition from homegrown carmakers, high costs at home and a stumbling shift toward electric vehicles.

German auto manufacturers have also expressed fears over a possible retaliation by China, a critical market, to tariffs of up to 38 percent on Chinese electric car imports.

Recently, Mercedes-Benz, BMW and VW's sports car subsidiary Porsche cut their outlook for the financial year.

rc/lo (dpa, Reuters)