Volkswagen Reaches Agreement with Labor Leaders

Volkswagen AG (OTC:VWAGY) has finalized a deal with labor leaders to reduce production capacity without closing any factories. This agreement concludes three months of intense negotiations and prevents further union strikes.

Key Terms of the Agreement

• Volkswagen committed to maintaining operations at all 10 German factories and reinstating job security agreements until 2030, as disclosed by the works council.
• Employees have agreed to give up some bonuses, reduce the number of apprentices receiving permanent employment, and cut production at five locations by several hundred thousand units.

The discussions spanned five rounds and resulted in a deal less severe than Volkswagen’s initial proposals, which included significant layoffs, wage cuts, and the shutdown of three factories aimed at improving competitiveness.

Management successfully persuaded labor leaders to shift Golf hatchback production from Wolfsburg, Germany, to Mexico and reduce capacity at the Zwickau electric vehicle plant.

The agreement offers CEO Oliver Blume a chance to revitalize Volkswagen amidst declining market share in China and weakening demand for electric vehicles in Europe and the US.

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