Tens of thousands of Volkswagen employees, represented by the IG Metall union, have begun a warning strike against company plans to shut down three plants and cut pensions.

Volkswagen faces toughest wage dispute ever

At 9.30 am on Monday, tens of thousands of workers at nine Volkswagen plants across Germany began a strike against the international company’s 18-billion-euro budget cut plan.

The cuts would mean closing three Volkswagen factories, risking tens of thousands of jobs. The company currently has 10 plants in Germany, all of which are in the north. It is yet unclear which plants would close, but each plant employs between 2.300 and 70.000 people.

Last month, an employee works council at Volkswagen put forward an alternative plan, which it claimed would save the company 1,5 billion euros without having to close plants. Money-saving measures included cutting bonuses at the managerial level and foregoing pay rises that IG Metall previously demanded. Instead, the council offered to maintain wage rates in exchange for reduced working hours.

Volkswagen management argued the works councils’ plan would not lead to “long-term financial relief for the company”. With the employees’ suggestions now spurned and tens of thousands of jobs at risk, IG Metall representative Thorsten Groeger said, "If necessary, this will be the toughest wage dispute Volkswagen has ever seen."

"Volkswagen has set fire to our collective bargaining agreements,” Groeger added. "What follows now is the conflict that Volkswagen brought about — we did not want it, but we will conduct it in the most committed way necessary!"

Why does Volkswagen want to close plants?

Production has slowed at Volkswagen in recent years due to rising manufacturing costs. In October the company recorded a quarterly profit drop of 64 percent.

Where the German auto industry previously saw high demand from China, this demand is now being supplied by Chinese manufacturers.

The EU will begin a tariff of up to 38 percent on electronic vehicles imported from China, and some fear that retaliation from China means decreased demand could only worsen.

Slowed production hasn’t only affected Volkswagen, with Mercedes-Benz, BMW and Porsche all planning cuts.

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