Volkswagen CEO expects significant concessions from unions in crunch talks

FRANKFURT (Reuters) - Volkswagen (ETR:VOWG_p )'s CEO expects labour unions to make proposals on how to cut costs and close a gap with competitors, two days before talks over plant closures and new wage deals.

Europe's top carmaker earlier this month cancelled long-standing job security schemes and said it was considering plant closures in its home market for the first time.

This prompted a clash with unions who have pledged fierce resistance. In a sign of how tense the situation has become, talks about a new wage agreement and future budgets are slated to start a month ahead of schedule on Sept. 25.

Unions have ruled out plant closures, leaving the question of where savings will come from without job cuts.

"I expect to see significant movement there in order to make progress on the cost side," Volkswagen Group Chief Executive Oliver Blume told broadcaster RTL/ntv.

"Costs at Volkswagen are too high compared to international competition," Blume said, adding the group would be reviewing all levers in the coming weeks regarding cuts of development, materials, fixed, manufacturing and retail costs.

He said labour costs in Germany were twice the European level, also telling German broadcaster ZDF that the aim was to get a broad deal on investments and labour agreements this year.



Blume's comments came as carmakers and suppliers are set to hold a virtual meeting with German Economy Minister Robert Habeck later on Monday regarding the health of the auto industry, Germany's most important.

It follows mounting trouble for the country's carmakers, with both BMW (ETR:BMWG ) and Mercedes-Benz (OTC:MBGAF ) warning on profit in recent weeks as a result of a weakening Chinese car market, the world's largest.

Source: Investing.com