Labor dispute at VW escalates amid worsening cost crisis

They were just a trickle first, but then hundreds of workers at VW's factory in Hanover, Germany, came walking out of Gate 3 in large swaths, waving signs reading "We are ready for strike!" and the red flags of Germany's powerful metalworkers' union, IG Metall.

The Hanover plant is where VW produces light commercial vehicles, including VW's electric minibus, ID.Buzz, which is the successor to the company's iconic "Bulli" — short for bus and delivery van in German —  which had been rolling off the assembly line for more than 65 years, but is now produced in Turkey.

VW workers in Hanover are joining in a strike that is hitting almost all VW plants in Germany.

"For me the most important thing is that they keep this production site," says Hassan Savas, who's been working for VW for 24 years and is now joining in a crowd of workers rallying at the local market square. "They should abolish bonus payments. Oliver Blume made 10.3 million euros and what do we get?," he told DW.

What Hassan Savas is so angry about is a decision by VW's management, including CEO Oliver Blume, to close several VW plants in Germany and lay off thousands of workers. The move is unprecedented in the carmaker's more than 87 years of history, and comes after it had scrapped a job security agreement with labor unions earlier this year that had ruled out dismissals until 2029.

Moritz, a second-year apprentice at the plant who doesn't want to see his full name published, says a lot of VW workers are "really angry."

"Apprentices should get more money and should receive contracts after their training, but that‘s both at stake," he told DW.

Why are VW workers going on strike?

While workers at VW's factory in Osnabrück, Germany, have secured a seperate bargaining agreement and don't participate in the strike, the rest of VW's workforce in Germany is still hoping for a new deal.

In a recent round of wage negotitions, VW workers have offered  to back €1.5 billion ($1.6 billion) in cost savings if management rules out closing plants in Germany, but warned the automaker would face an historic battle if it pressed ahead with swingeing cuts.

VW management is pushing for wage cuts of up to 10% to lower costs in the wake of dwindling revenues. Europe's biggest carmaker also wants to close three plants to reflect falling demand, especially for its electric vehicles (EVs). 

The IG Metall union announced over the weekend that industrial action would get underway Monday with a series of "warning strikes," which are short walkouts, after the company had last week rejected the union's proposals for protecting jobs.

VW Group, which owns 10 brands from Audi and Porsche to Skoda and Seat, said in a statement it "respects workers' rights" and believes in "constructive dialogue" in a bid to reach "a lasting solution that is collectively supported." It also said that it had taken "measures to guarantee urgent deliveries" during the strike action.

Collective bargaining negotiations are said to resume on December 9th, with the workers rallying in Hanover saying the are supporting the labor union's calls for the "most massive strike action VW has ever seen."

Why is Germany's car industry so important?

The walkouts at VW come as Germany's all-powerful auto industry is facing a crisis amid declining European demand and tough competition from China. With the Wolfsburg-based auto manufacturer being Germany's biggest industrial employer, a crisis at VW has nationwide repercussions.

In 2023, nearly 780,000 people were employed in the German automobile industry, according to the German Association of the Automotive Industry, with more than 465,000 jobs supplying parts and equipment to the biggest carmakers, including VW, BMW and Mercedes.

The share of the automobile industry to Germany's gross domestic product (GDP) is bigger than in any other European country.

The slowdown in German auto production, meanwhile, has reached manufacturers beyond VW. Premium carmaker Mercedes, for example, is planning to cut costs of several billion euros. Tire maker Continental will be laying off 7,150 workers worldwide, and electronic-parts supplier Bosch plans to cut up to 5,550 jobs.

US auto giant Ford  also announced it would reduce its workforce in Germany by 2,900 workers, while 14,000 jobs are at risk at supplier ZF, and 4,700 at Schaeffler Group, another important auto-industry supplier.

Edited by: Uwe Hessler