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Volkswagen Faces Strike Over Labor Issues in German Plants
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Volkswagen AG (VWAGY - Free Report) saw tens of thousands of its workers join strikes at plants across Germany on Monday. The strikes lasted several hours and followed weeks of stalled negotiations during which Volkswagen declined to rule out significant workforce reductions and potential plant closures in its home market. Per VWAGY, such measures are necessary to remain competitive in the face of challenges from Chinese automakers and a slowdown in European demand.
A peace obligation that previously prevented industrial actions expired on Saturday, paving the way for strikes to begin on Sunday at nearly all of Volkswagen’s German factories. Per Thorsten Groeger, IG Metall’s chief negotiator, the length and intensity of the dispute will depend on Volkswagen’s approach to negotiation. He accused the company of escalating tensions rather than resolving disputes.
These walkouts mark Volkswagen’s first large-scale strikes since 2018 when 50,000 employees halted production over pay disputes. While the current stoppages are limited to a few hours, there is a possibility that 24-hour strikes could follow. Per the IG Metall, indefinite strikes are the union’s last resort, but only after consulting with union members again.
The strikes come at a challenging time for VWAGY, which saw a 20% year-over-year drop in operating profit during the first nine months of the year. Weak sales in China, where the company is losing ground to domestic electric vehicle competitors, have added to its difficulties. Volkswagen has taken steps to minimize the impact of the strikes on its operations and customers and emphasized its commitment to constructive negotiations to resolve the dispute.
The company expressed the possibility of closing its plants in Germany for the first time in its 87-year history. It also proposed a 10% cut in employee pay to enhance cost competitiveness and secure its future. In response, IG Metall suggested workers would forego €1.5 billion in pay increases if Volkswagen agreed to keep factories open and if executives were ready to sacrifice a part of their bonuses. The fourth round of negotiations is scheduled for Dec. 9, 2024.
The Zacks Consensus Estimate for DORM’s 2024 sales and earnings suggests year-over-year growth of 3.66% and 51.98%, respectively. EPS estimates for 2024 and 2025 have improved 75 cents and 88 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for TSLA’s 2024 sales suggests year-over-year growth of 2.97%. EPS estimates for 2024 and 2025 have improved 2 cents each in the past 30 days.
The Zacks Consensus Estimate for BYDDY’s 2024 sales and earnings suggests year-over-year growth of 25.07% and 31.51%, respectively. EPS estimates for 2024 and 2025 have improved 23 cents and 26 cents, respectively, in the past 30 days.
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Volkswagen Faces Strike Over Labor Issues in German Plants
Volkswagen AG (VWAGY - Free Report) saw tens of thousands of its workers join strikes at plants across Germany on Monday. The strikes lasted several hours and followed weeks of stalled negotiations during which Volkswagen declined to rule out significant workforce reductions and potential plant closures in its home market. Per VWAGY, such measures are necessary to remain competitive in the face of challenges from Chinese automakers and a slowdown in European demand.
A peace obligation that previously prevented industrial actions expired on Saturday, paving the way for strikes to begin on Sunday at nearly all of Volkswagen’s German factories. Per Thorsten Groeger, IG Metall’s chief negotiator, the length and intensity of the dispute will depend on Volkswagen’s approach to negotiation. He accused the company of escalating tensions rather than resolving disputes.
These walkouts mark Volkswagen’s first large-scale strikes since 2018 when 50,000 employees halted production over pay disputes. While the current stoppages are limited to a few hours, there is a possibility that 24-hour strikes could follow. Per the IG Metall, indefinite strikes are the union’s last resort, but only after consulting with union members again.
The strikes come at a challenging time for VWAGY, which saw a 20% year-over-year drop in operating profit during the first nine months of the year. Weak sales in China, where the company is losing ground to domestic electric vehicle competitors, have added to its difficulties. Volkswagen has taken steps to minimize the impact of the strikes on its operations and customers and emphasized its commitment to constructive negotiations to resolve the dispute.
The company expressed the possibility of closing its plants in Germany for the first time in its 87-year history. It also proposed a 10% cut in employee pay to enhance cost competitiveness and secure its future. In response, IG Metall suggested workers would forego €1.5 billion in pay increases if Volkswagen agreed to keep factories open and if executives were ready to sacrifice a part of their bonuses. The fourth round of negotiations is scheduled for Dec. 9, 2024.
Volkswagen’s Zacks Rank & Key Picks
VWAGY currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the auto space are Dorman Products, Inc. (DORM - Free Report) , Tesla, Inc. (TSLA - Free Report) and BYD Company Limited (BYDDY - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for DORM’s 2024 sales and earnings suggests year-over-year growth of 3.66% and 51.98%, respectively. EPS estimates for 2024 and 2025 have improved 75 cents and 88 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for TSLA’s 2024 sales suggests year-over-year growth of 2.97%. EPS estimates for 2024 and 2025 have improved 2 cents each in the past 30 days.
The Zacks Consensus Estimate for BYDDY’s 2024 sales and earnings suggests year-over-year growth of 25.07% and 31.51%, respectively. EPS estimates for 2024 and 2025 have improved 23 cents and 26 cents, respectively, in the past 30 days.