BERLIN/WOLFSBURG (Nov 20): Unions on Wednesday threatened a far-reaching escalation of a dispute with Volkswagen over what they estimate to be over €17 billion (US$18 billion or RM80.15 billion) in planned cost cuts, raising the spectre of strikes at a time of turmoil for German industry.

The comments come a day ahead of a third round of crunch talks between workers and management over pay cuts and factory shutdowns in Germany in the fiercest dispute in years at Europe's biggest automaker, which is reeling from high costs and Chinese competition.

Workers are prepared to make concessions worth €1.5 billion in savings in the ongoing negotiations, but said this was contingent on Volkswagen ruling out plant closures as well as stakeholders, including the company's controlling Porsche and Piech families, pitching in.

Thorsten Groeger, who leads negotiations for the IG Metall union, said otherwise Volkswagen workers would enter a conflict with the company "the likes of which this republic has not seen for decades".

Strikes at the majority of the carmaker's German sites, which are at the heart of the conflict, are possible from Dec 1.

Volkswagen has said deep cuts at its core VW brand are needed to make it fit for the future, asking for a 10% pay cut and not ruling out plant closures, which union said are part of all scenarios presented by management.

An internal memo drawn up by Volkswagen's works council, reviewed by Reuters, shows the company spends a higher proportion of sales on labour costs than major rivals.

The concessions from IG Metall and the works council are part of a package of proposals laid out on Wednesday aimed at reducing the impact of cuts on workers.

"The problems that we have are not created by the workforce and will not be solved by only looking at labour costs. Yet we are ready to make a contribution with what we have laid out here today," Groeger said.

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