Workers at Volkswagen (VWAGY) (DE:VOW3) automotive plants throughout Germany have begun staging rotating strikes as the conflict between management and employees over potential factory closures intensifies.
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Nine of Volkswagen’s factories in Germany have been impacted by what workers are calling “warning strikes,” with work either being halted for demonstrations or shifts ending abruptly. The strikes come after three rounds of labor negotiations between Volkswagen and its main workers union failed to produce a new collective agreement.
While additional negotiations are planned for later in December, workers are angry after Volkswagen canceled labor agreements and employment protections that have been in place at the automaker since 1994. Management have said that they will likely need to close several manufacturing facilities in Germany for the first time in the company’s 87-year history.
Pay Cuts and Layoffs
Management have also warned that they are considering widespread pay cuts and layoffs at Volkswagen as they adjust to slowing automotive sales, particularly of electric vehicles. Workers had been prevented from taking strike action under a contract provision that ended on Dec. 1.
The last major strike at Volkswagen occurred in 2018, when 50,000 workers walked off the job in protest of wages and scaled back benefits. The stock of Volkswagen has declined 22% this year to trade at €80.64 (US$84.44).
Is VW Stock a Buy?
Volkswagen stock has a consensus Moderate Buy rating among 13 Wall Street analysts. That rating is based on nine Buy, three Hold, and one Sell recommendations issued in the last three months. The average VOW3 price target of €141.58 implies 75.53% upside from current levels.
