Volkswagen and Labor Unions Plan Talks for Recovery After Emissions Scandal

Volkswagen AG Reported To Be In Talks Over Pollution Punishment Funds
New automobiles, manufactured by Volkswagen AG, sit on railway transporters in Munich, Germany, on Wednesday, March 17, 2016. Volkswagen is in talks with U.S. authorities to establish a national remediation fund and a separate one for California as punishment for pollution from its cars after the automaker cheated on diesel-emissions tests, said people familiar with the matter. Photographer: Krisztian Bocsi/Bloomberg via Getty Images
Photograph by Krisztian Bocsi—Bloomberg via Getty Images

Volkswagen said its executives and labor bosses will begin talks next week on the future of the carmaker’s German plants as they seek to recover from a costly diesel emissions scandal.

Industrial relations at Volkswagen’s core VW brand hit a low in April when works council boss Bernd Osterloh accused VW chief Herbert Diess of betraying workers and trying to use “Dieselgate” as a pretext for job cuts.

But two weeks after Volkswagen (VLKAY) and the IG Metall union struck a pay deal for the firm’s 120,000 workers in western Germany, top managers and labor leaders on Tuesday signaled further rapprochement at a critical time for Europe’s biggest automaker.

After a gathering of more than 20,000 workers at the main Wolfsburg plant, Volkswagen’s brand management and works council issued a joint statement saying they had “reached a common understanding about the starting situation and the challenges” created by the emissions crisis.

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Pressure has mounted to make cuts at Volkswagen’s core operations in Germany since the revelations almost nine months ago that the company had fitted some of its models with “cheat” devices which enabled them to pass emissions tests.

This has led to U.S. regulatory bodies seeking billions in damages and fines from the German company.

“We must raise productivity and profitability and cut costs,” VW human resources chief Karlheinz Blessing said. “Then, VW can and will remain a strong engine for employment.”

“This (rebuilding of VW) requires a huge effort from the company and its workforces,” Osterloh said. “VW will only be able to offer safe jobs over the long term if we now take bold decisions.”

Volkswagen plunged to a record loss last year after setting aside 16.2 billion euros ($18.4 billion) to cover the costs of the emissions scandal, but still faces potential U.S. Justice Department fines and questions over who was responsible.

Next week it will present a new business plan aimed at improving accountability and decentralizing product planning and sales operations, with greater investment in electric cars and mobility services.

Bilateral talks on the future of VW’s German factories, which labor wants to set fixed targets and quotas for products, output and investments, should be concluded by the autumn, VW said.

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