China Is to Blame Again? Unions Won’t Back Down on VW Plant Closure Ban

Volkswagen Group’s labor leadership has reaffirmed that factory closures remain completely off the table, while signaling a willingness to discuss new ways to utilize underused manufacturing capacity in Germany. The joint statement was obtained by Reuters.

Volkswagen is currently exploring options to reduce excess production capacity across its German operations without shutting down plants, a move prohibited under the 2024 restructuring agreement negotiated with labor unions. Among the ideas under consideration are partnerships with defense contractors and potential cooperation with Chinese automakers.

Works council chief Daniela Cavallo, IG Metall union president Christiane Benner, and regional union leader Thorsten Gröger stressed that the 2024 agreement — including guarantees protecting Volkswagen’s German factories — is non-negotiable.

“The fundamental situation has not changed, and neither have the workers’ red lines,” the statement said. “With us, the Group Works Council and IG Metall, there will be no factory closures.”

Volkswagen’s profitability has been squeezed by sluggish demand and the high costs tied to the industry’s transition to electric vehicles. The company also faces mounting pressure from aggressive Chinese competitors, rising trade barriers, and continued instability in the Middle East, all of which are driving up costs and increasing uncertainty.

After another decline in earnings earlier this year, Volkswagen Group CEO Oliver Blume said the automaker would continue searching for additional cost-cutting measures. He acknowledged that sharing factory space with Chinese partners could be one way to address overcapacity, although no formal negotiations have been confirmed.

At the same time, discussions are continuing over a possible sale of Volkswagen’s Osnabrück plant to a defense industry company.

Speaking at a Financial Times conference in London, Volkswagen brand chief Thomas Schäfer said the automaker is working to better align production volumes with demand, describing factory closures as “the second-best option.”

Union representatives said they remain open to proposals from both within Volkswagen and outside partners, provided management honors the commitments made in 2024. Cavallo, Benner, and Gröger emphasized that their priorities remain secure jobs, long-term career opportunities, and fair working conditions, adding that they are prepared to resist any measures that undermine those principles.