The German carmaking giant proposed a landmark deal after engaging in talks with the United Auto Workers Union since April. The offer, which would give U.S. Volkswagen workers their first contract, includes for the first time profit-sharing in addition to expanded healthcare benefits.  

According to Volkswagen’s website, the group employs 5,500 workers in Chattanooga, who make an average salary of more than $60,000 before benefits and a potential attendance bonus.  

In a statement, Volkswagen described the contract proposal as a “compelling economic offer.”

However, the proposal has failed to satisfy workers in Tennessee.

In a statement, UAW-VW Bargaining Committee member Yogi Peoples said: “We’ve been bargaining for months, and VW is still not taking our demands seriously. 

“With the record profits they’ve made and the dividend schemes they’ve used to pad the pockets of shareholders, there’s more than enough money to meet our demands for a record contract.”

While Volkswagen grapples with a satisfactory pay hike for workers in the U.S., the company continues to battle its union back home over proposed cuts.

Volkswagen struggles with German cuts

Volkswagen is seeking to trim costs in its domestic market, which contains by far the group’s biggest employee base, numbering nearly 300,000 at the end of 2023.

At the heart of this plan is a proposal for a 10% pay cut for German workers, alongside an unspecified number of job cuts.

The company scrapped a 30-year-old labor agreement in September, which opened the way for layoffs, while it has also proposed closing factories in Germany for the first time in its 87-year history.

Volkswagen says its current setup in Germany is no longer competitive amid falling EV demand and a rising Chinese auto market. 

There is also the lingering question of Donald Trump’s imminent return to the White House. Trump has threatened to level fresh tariffs on European manufacturers, namechecking the continent’s carmakers in the process.

Volkswagen’s German competitor BMW has already said it had the capacity to shift production for U.S.-bound cars to the country if import tariffs were implemented. 

As in Tennessee, however, Volkswagen has struggled to get its points across in Germany. Nearly 100,000 Volkswagen workers are reported to have joined strike action at the start of December as talks between the carmaker and its powerful works council continue.

During a meeting with thousands of workers last week, Volkswagen CEO Oliver Blume was reportedly drowned out by boos as he said management wasn’t “operating in a fantasy world” and spoke about his affection for Wolfsburg, which houses Volkswagen’s biggest plant.

A report by German publication business monthly manager magazin, picked up by Reuters, suggested Volkswagen board members were now leaning away from closing large factories in Germany in favor of closing smaller plants.

A representative for Volkswagen didn’t immediately respond to a request for comment.