by Christina Amann

HANNOVER, Germany (Reuters) – Volkswagen’s management announced on Friday a major reorganization of its activities in Germany, which will lead to more than 35,000 job cuts and a reduction in production capacity at the German carmaker, as part of an agreement with the unions.

IG Metall, the powerful German metalworks union, stressed for its part that the group was committed not to close factories and not to carry out economic layoffs or wage cuts in the near future.

“With this triple agreement, we have reached an extremely solid solution in a very difficult economic context,” said the president of the group’s works council and IG Metall elected official Daniela Cavallo, who led the negotiations on behalf of the employees. .

Volkswagen had been in talks since September with union representatives to validate a cost reduction program presented by management as essential to face competition from Chinese manufacturers, weak demand in Europe and much slower expansion. than expected from electric vehicles.

Last month, some 100,000 employees of the group – out of nearly 300,000 in Germany – stopped work twice to protest against plans to reduce wages and capacity, or even close factories.

“After long and intense negotiations, this agreement is an important signal for the future viability of the Volkswagen brand,” VW CEO Oliver Blume said in a statement.

Volkswagen said the agreement reached, without significant financial impact on its 2024 targets, would save 15 billion euros per year in the medium term.

It said it was looking at alternative options for its Dresden plant, where vehicle production is expected to cease by the end of 2025, and a conversion for its Osnabrück site. Part of the production will be relocated to Mexico, added the manufacturer.

IG Metall said a 5% wage hike agreed to last November would be suspended.

“No site will be closed, no one will be laid off for operational reasons and our group salary agreement will be preserved in the long term,” said Daniela Cavallo.

This agreement is the culmination of 70 hours of negotiations since Monday in a hotel near Hanover, the longest in the history of Volkswagen, created 87 years ago.

Volkswagen management must obtain approval from a two-thirds majority of the 20-member supervisory board for any decision to build or move a factory. The works council, which holds half of the seats on the board, can therefore veto any major project.

(Reporting Christina Amann; written by Matthias Williams; Etienne Breban and Jean-Stéphane Brosse)

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