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VW Working On Deal With Labor for Jobs, Investments

September 14, 2016

The UK Are To Re-run Emissions Tests On Volkswagen Cars After German ScandalThe UK Are To Re-run Emissions Tests On Volkswagen Cars After German Scandal
Did VW take EU money to develop clean engines and use it to make defeat devices? Photograph by Rob Stothard — Getty Images

Volkswagen said on Wednesday it hoped to reach a deal with labor leaders in coming weeks that will set concrete targets for investments, products, and jobs as it repositions the business following its diesel emissions scandal a year ago.

Volkswagen (VLKAY) is under pressure to make cuts at high-cost operations in Germany to fund a transformation involving greater investment in electric cars and mobility services, while grappling with billions in costs for its emissions scandal.

After a gathering of more than 20,000 workers at its Wolfsburg plant on Wednesday, VW’s management and works council issued a statement saying they were preparing the core VW brand—its Achilles’ heel in recent years—for the future.

“I am confident that we can bring the negotiations about the future pact to conclusion in the coming weeks,” VW brand chief Herbert Diess said. “That includes targeted investments and decisions about new products.”

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Even before the emissions scandal, VW’s namesake brand was struggling with weak profit margins due to a proliferation of models and parts. It is VW’s biggest division by vehicle sales and revenue, employing over 200,000 people worldwide, a third of the group’s global total, at over 30 factories excluding China.

“We are facing a tough fitness program,” VW human resources chief Karlheinz Blessing said.

“That also includes a reduction in personnel, for instance via early retirement,” he added, without giving details.

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Talks on the pact between VW brand executives and labor bosses started in June when Wolfsburg-based VW announced its group “Strategy 2025” plan. Details of that program will be presented in November, chief executive Matthias Mueller said.

The CEO said VW was still carrying out “intensive” work to clarify the root causes of its emissions scandal and hoped to publish results of an investigation led by U.S. law firm Jones Day in the autumn.

“Then and only then will we have clarity and be able to possibly draw further consequences,” Mueller said.