FRANKFURT -- An agreement to save around 80 million euros ($96 million) a year will allow Volkswagen to build a new model at its German plant in Emden starting in 2008, Europe's biggest carmaker said on Wednesday.
The accord with the works council and the IG Metall labor union modifies an existing in-house wage agreement and calls for spreading the 28.8-hour work week over five days rather than four to save money on breaks and shift differentials, it said.
The move reflects Volkswagen's drive to chop the highest labor costs in the car world and regain a competitive edge against nimbler rivals.
It follows an agreement last month that will let VW build a new compact SUV at its main plant in Wolfsburg -- thus securing 1,000 jobs -- in return for labor concessions that will save it 850 euros per vehicle made.
VW has also promised to build an additional model in Wolfsburg if it can agree terms that ensure profitability.
"Our German plants must be able to produce at prices that allow exports. The agreement for Emden marks another important step to strengthen our competitiveness," VW brand chief Wolfgang Bernhard said in a statement.
The upper mid-class model to be assembled in Emden will be in addition to the 200,000 Passat sedans and estate cars the plant builds now.
IG Metall said the model had the project name VW CC-Coupe and would ensure up to 1,000 jobs at the plant that now employs 9,600 staff.
"Producing the VW CC-Coupe will take place under the in-house wage accord," union negotiator Hartmut Meine stressed in a statement, calling the agreement a stable and flexible deal that shows VW can make money building cars in Germany.
The new SUV in Wolfsburg, in contrast, will be built by a separate VW unit that uses lower-cost workers not covered by the in-house agreement for 100,000 VW brand staff.