Volkswagen agrees deal to avoid Germany plant closures

Volkswagen has reached an agreement with the IG Metall union that will prevent the closure of factories in Germany and prevent early redundancies.

The two parties have agreed to cut more than 35,000 jobs across the country in a “humanitarian way” by 2030, to save 15 billion euros (£12.4bn).

Germany’s biggest carmaker has previously warned it could close plants in the country for the first time in a bid to cut costs.

After negotiations that began in September, the union said on Friday that the two “succeeded in finding a solution” that makes work possible and helps finance.

VW was considering closing three factories in Germany and asked workers to accept a 10% pay cut.

At the time, the union wanted a 7% increase.

Although the union will also see a reduction in production at its factories, it has been welcomed by union leaders.

“No facilities will be closed, no one will be suspended for work reasons and our collective wage agreement will be protected for the long term,” said IG Metall council chief Daniela Cavallo.

“We have found a solution to this problem under very difficult economic conditions,” he said.

A reduction of 35,000 jobs by 2030 is expected to be achieved through various measures such as early retirement.

Under the agreement, the previously agreed 5% wage increase will also be suspended in 2025 and 2026.

The union says this will help “support change” at the company.

The number of scholarships awarded annually in Germany will be reduced from 1,400 to 600 from 2026 as well, and will also see some changes in Mexico.

It is also looking at alternatives for its Dresden and Osnabrueck sites.

But Oliver Blume, head of the VW group, said that the deal is “an important sign for the future of the Volkswagen brand”.

The closing of the factory in Germany is unprecedented in the history of the manufacturer.

VW, along with other German automakers, have been hit hard by the decline in their cars in China, once a lucrative market.

At the same time, Chinese products have been moving to Europe, increasing sales competition.

During these negotiations, approximately 100,000 workers joined brief, so-called “warnings” in many areas across the country, in an effort to pressure the company’s management.

The latest round of talks began on Monday, with negotiators apparently determined to end the deal before Christmas.

German Chancellor Olaf Scholz also welcomed the announcement, describing it as “a positive, socially acceptable move”.