VW to Consider Union’s Labor Cost-Reduction Proposals

Volkswagen AG and IG Metall, the union that represents its workers, agree to discuss labor-cost reductions as the auto maker struggles to meet its 2008 profit target.

The first order of business will be for Volkswagen to examine a set of IG Metall proposals on improving capacity utilization. Horst Neumann, Volkswagen board member for human resources, welcomes the proposals.

“The situation of the company has changed dramatically in recent years,” Neumann says in a statement. “Competition has become tougher, (and) Volkswagen has been living beyond its means.”

As talks evolve, the production assignment for the next VW Golf hangs in the balance, Neumann adds. Whether Wolfsburg gets to build the high-volume car is contingent on a deal that includes union concessions, such as more hours worked without extra pay.

“We are fighting for German plants. We want to keep the jobs in Germany,” Neumann says. “But (Wolfsburg) must be competitive.”

A similar deal was reached last year that prevented production of a new VW cross/utility vehicle from moving to Portugal from Germany.

Last month, at a United Auto Workers union convention in Las Vegas, IG Metall executive Marcello Malentachi warned contentious talks with management were ahead.