VW starts talks to cut costs, not jobs

Naomi Kresge
Bloomberg News

Volkswagen AG opened talks with unions on how to cut costs without eliminating jobs as the German carmaker grapples with rapid technological change and billions of euros in damages from cheating on diesel-emissions tests.

Negotiations between employee representatives and management are aimed to be completed by this fall so that the results can be incorporated into next year’s plans, Volkswagen said in an statement Tuesday. Negotiations will focus on the core VW brand, which saw profit tumble 86 percent in the first quarter over the diesel scandal.

“We can’t waste time, because very fast and wide-reaching changes are coming in our industry,” VW brand chief Herbert Diess said in a separate statement. “We’re holding our future in our hands.”

Volkswagen has pledged to introduce more electric cars and invest in technology for self-driving and Internet-connected vehicles. Along with adapting to these industry trends, the company has set aside $18.4 billion to cover repairs and legal risks linked to the emissions cheating revealed last September. The extra burden has made boosting margins at Volkswagen’s namesake marque, which struggled with weak profitability even before the crisis, critical for the German manufacturer.

“The Volkswagen brand’s earnings are not developing well enough to master the tasks that lie ahead,” Karlheinz Blessing, the carmaker’s personnel chief, said in the statement. “We must increase productivity and profitability and reduce costs.”

In exchange for savings concessions, unions want investment and production commitments to secure jobs. They also want programs to retrain staff in positions that will become obsolete in the shift to electric-powered, self-driving vehicles.

“That is why we expect to see a comprehensive qualification program as a key building block in the pact for the future,” Bernd Osterloh, Volkswagen’s top worker representative, said at a gathering of 20,000 employees at the company’s main factory in Wolfsburg. “This plan must ensure that employees — from technical development and production through to sales and components — can take the path into the digital and electric future.”