VW and union getting closer to deal, sources say

By Christina Amann

BERLIN (Reuters) -Volkswagen is getting closer to a deal with labour leaders in the company's longest negotiations over pay and jobs, sources told Reuters on Friday, as Europe's largest carmaker tries to push through cost cuts and avert mass strikes.

Volkswagen (ETR:VOWG_p ) has been in talks with labour representatives since September over measures it says are necessary for it to compete with cheaper Chinese competitors, lacklustre demand in Europe and slower-than-expected adoption of electric vehicles.

Around 100,000 workers have already staged two separate strikes in the past month, the largest in Volkswagen's 87-year history, protesting against plans to cut wages, reduce capacity and potentially shut German plants for the first time.

The fifth round of negotiations has been under way since Monday and continued deep into the night this week. Both sides have said they are aiming to secure a deal and give workers some certainty by Christmas.

"We are getting closer," a source familiar with the negotiations said. A second source close to the negotiations confirmed that view.

The crisis at VW has hit at a time of uncertainty and political upheaval in Europe's largest economy, as well as wider turmoil among the region's automakers. How to fix Germany's sluggish growth has taken centre stage as a campaign issue ahead of a snap election in February.

VW workers strongly oppose plant closures, but Volkswagen has said they may be necessary to find around 4 billion euros ($4.2 billion) in savings to respond to what it expects is structurally weaker demand in Europe.

VW's structure is unique, with management having to get approval from a two-thirds majority in the 20-strong supervisory board for any decision to build or move a production plant. That means 10 members representing German labour unions can veto any far-reaching plans that affect factories.



Any agreement with the unions would require approvals by Volkswagen committees which could complicate and delay a possible deal.

Germany's powerful IG Metall union had on Thursday accused Volkswagen of delaying critical decisions toward an agreement, adding that both sides disagreed in key areas and that talks could still collapse.

Source: Investing.com