Volkswagen and the employee unions have not reached an agreement. Workers are threatening to strike as the risk of plant closures lingers

Volkswagen is facing a crisis as the risk of German factory closures looms over the German group. The company has not reached an agreement with the unions, and employees are threatening strikes.

The German manufacturer has refused union grievances after the first round of hotly contested talks ended without a deal, reports Reuters. Workers at Europe’s biggest carmaker are threatening strikes against layoffs and possible factory closures in Germany, an unprecedented situation in the history of the automaker.

Tensions within the company continue to rise as the possibility of factory closures, which would be a first for the company in Germany, has put it on a collision course with the powerful IG Metall union.

IG Metall must also negotiate new labor contracts for the 130,000 Volkswagen brand workers in Germany after the group this month ended agreements that had secured employment at six of its plants in western Germany since the mid-1990s.

Workers’ representatives have vowed to fight the job cuts, blaming management and unwavering government support for Volkswagen’s problems. The brand’s chief of staff said the division needed to cut costs to remain competitive.

Volkswagen factory workers threaten to strike

“This will need support from the employees,” Arne Meiswinkel said after the talks in Hanover. The IG Metall union has threatened protests that could start as early as December this year and is demanding a 7% wage increase.

“Site closures and mass layoffs remain standing,” said Thorsten Groeger, IG Metall’s chief negotiator with Volkswagen. No date has been set for the next round of negotiations between the two sides.

The head of the works committee, Daniela Cavallo, said that the employees are not giving up on any of the demands presented. She also linked to Volkswagen’s 87-year history, referring to the expropriation of union funds during the Nazi regime.

“At average interest, this capital, which the Nazis had looted from the labor movement at the time, would have generated billions of euros over the decades. This money, our money, is today in the Volkswagen Group,” she declared.

Volkswagen says rising energy and labor costs in Germany are putting the company at a disadvantage against European peers, as well as Chinese rivals, which are starting to make more inroads into Europe.