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Volkswagen and IG Metall have reached a deal that will cut technical capacity by 750,000 units, among other things
- IG Metall said it has reached a deal with Volkswagen management to avoid plant closures and guarantee workers’ jobs until 2030.
- In return, the union will withdraw its demand for wage increase until 2031, forego some bonuses, reduce the number of apprentices who get permanent jobs, and significantly cut capacity at five sites.
- CFO Arno Antlitz confirmed that the agreement reached will cut technical capacity by 750,000 units.
- Volkswagen shares are up 2.7%.
Assessment
Details on the deal are still scanty. However, cutting capacity by 750,000 units will definitely solve its overcapacity problem and the cost savings will likely be as high as the 4 billion euros that the management was aiming at. CFO Antlitz had said that Volkswagen brand’s plants have excess capacity of around 500,000 units. Therefore, before getting more insights, I think the deal is very positive.