BERLIN (Bloomberg) - 
Volkswagen AG reached an agreement with labor leaders to cut capacity at its namesake brand while avoiding factory closures, capping three months of tense negotiations and preventing further union walkouts.
VW agreed to keep the brand’s 10 German factories operational and reinstate job security agreements until 2030, the works council said Friday, confirming an earlier Bloomberg report. In exchange, workers agreed to forego some bonuses, cut capacity at five sites by several hundred thousand units and reduce the workforce by more than 35,000 over the next five years.
Friday’s breakthrough in the northern city of Hannover came after a marathon negotiations lasting 70 hours — the longest in the carmaker’s history.
Gröger said that under the agreement, workers will have job security until 2030 but will have to forego wage increases in the coming years and bonuses will be cut.
He said the package “includes painful contributions from employees, but at the same time creates prospects for the workforce.”
VW’s proposed plant closures, wage cuts and layoffs had already led to thousands of workers across the country going on strike twice in the past month.
The union had threatened further walkouts in the new year if a deal was not struck before the Christmas holidays.
The company said the agreement with the union would allow savings of €15 billion ($15.6 billion) a year in the medium term. It will also reduce technical capacity at its German sites by 700,000 vehicles.
“We had three priorities in the negotiations: reducing excess capacity at the German sites, reducing labor costs and reducing development costs to a competitive level,” said VW brand boss Thomas Schäfer. “We have achieved viable solutions for all three issues.”
The company cited competition from China, sluggish demand in Europe and slower-than-expected adoption of electric cars as reasons why it needed to cut costs.