Why Volkswagen is facing one of the biggest workers' protest in Germany

Roughly 66,000 Volkswagen AG workers across Germany abandoned their posts on Monday, the first wave of temporary walkouts triggered by a stalemate over how to slash costs at the carmaker’s namesake brand.

The so-called warning strikes — designed to pressure management during deadlocked negotiations — took place at all but one of VW’s ten German plants, starting with the company’s flagship electric-vehicle factory in Zwickau.

IG Metall, Germany’s powerful union, said it reserves the right to call for further warning strikes soon and that worker assemblies are planned at factories in the next few days.

“If necessary, this will be the toughest collective bargaining battle Volkswagen has ever seen," Thorsten Gröger, IG Metall’s lead negotiator in the VW talks, said ahead of the mass action.

VW’s management and labor leaders are at loggerheads over how to cope with a drop in demand for electric vehicles, higher operational costs and increasing competition from Chinese manufacturers. While management has said the company needs to shutter three German factories and lay off thousands of workers, union representatives have pushed to keep plants open.

The carmaker last experienced walkouts across all sites at a small scale in 2021 during the pandemic, but a larger work stoppage during wage negotiations in 2018 saw more than 50,000 workers across six factories take part.

VW’s shares fell about 1.9% early Monday before paring losses.

In Wolfsburg, employees left their stations Monday morning to attend a rally where works council chief Daniela Cavallo blasted management for refusing to back away from the threat of factory closures and for not supporting cuts in dividend payments as part of the savings plan.

“This warning strike is taking place to underline our legitimate demands," Cavallo told workers gathered in front of the high-rise building housing VW executive offices. “The board should know that the crisis at VW can only be resolved alongside the workforce, and not against them."

Two hours of halted production at four assembly lines at VW’s main plant in Wolfsburg translates into a loss of roughly 400 to 600 vehicles. The total is likely to exceed 1,000 when counting the other car plants in Germany.

Cavallo took aim at the company’s executives, including Chief Executive Officer Oliver Blume, who has largely deferred any substantial role in the negotiations to brand chief Thomas Schäfer and personnel chief Gunnar Kilian. Blume “takes a stance when it suits him and says he has nothing to do with the issues at the namesake brand," she said.

“We are unwilling to accept plant closures, mass layoffs and cuts to existing collective wage agreements," Cavallo added.

The company is seeking a constructive dialogue to achieve a jointly supported solution, a Volkswagen spokesman said on Sunday, adding that the company has taken specific measures in response to the planned walkouts.

Volkswagen on Friday dismissed the unionists’ most recent proposals as insufficient. The €1.5 billion ($1.6 billion) package of additional labor-side cost cuts included lowering dividend payouts, reducing portions of management and factory worker bonuses next year and in 2026, and putting planned wage increases into a fund to pay for possible layoffs and shift reductions.

A fourth round of negotiations is set to take place on Dec. 9, with Cavallo saying the meeting “is likely to determine the way forward: compromise or escalation."

VW’s corporate structure gives workers a strong voice in key decisions, making it difficult for management to unilaterally push through painful cost cuts. Employee representatives occupy half of the company’s supervisory board seats, while VW’s home state of Lower Saxony holds an additional two seats.

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