Volkswagen Strikes a Deal With Union, Won't Close Factories After All

VW's factory jobs will be protected until at least 2030.

Photo by: Volkswagen

By: Anthony Alaniz

Dec 20, 2024 at 2:43pm ET

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Volkswagen won’t have to close any of its factories in Germany after all. The automaker has reached an agreement with its IG Metall union that will keep all 10 of the automaker’s plants open in its home country. The automaker is also guaranteeing its workers jobs until the end of 2030.

According to The New York Times, the union agreed with the automaker to pull its request for a wage increase. It won’t ask again until 2031. The new agreement arrives after a months-long battle about the future of the brand’s operations in Germany in the face of dwindling sales and demand.

“No site will be closed, no one will be made redundant and our company wage agreement will be secured for the long term,” Daniela Cavallo, the head of the works council at Volkswagen, said in a statement.

However, Volkswagen has also announced it wants to cut 35,000 jobs, according to Autocar. It currently has about 120,000 employees in Germany, and it'll work to reduce its headcount over the next five years with early retirement packages and other voluntary measures as it looks to reduce costs. Even though VW will keep all its factories open, it'll repurpose two of them.

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Last month, Volkswagen CEO Thomas Schaefer said that the brand would need to close factories and force layoffs. Even the company’s works council had conceded in November that wage cuts might be needed. Rumors suggested VW's low-volume Dresden facility, where it builds ID.3s, and its Osnabruck plant, where it builds the Porsche 718, might even be on the chopping block. But that doesn’t appear to be the case anymore, despite the market's waning demand for EVs and the end of 718 production.

Volkwagen has had to make some tough decisions about its business this year, including deciding to sell one of its factories in China. The company cited “economic reasons” for the move, even though it’s promising to introduce 18 new models in the Chinese market by 2030.