German automaker Volkswagen rejected trade union demands for pay increases for German workers and continued to warn of deep cuts instead during initial collective bargaining talks on Wednesday. VW earlier this month cancelled a long-standing job security deal with workers and warned that it could no longer rule out mass layoffs or plant closures as part of an austerity plan at the auto brand.

Volkswagen rejected union demands after bitter negotiations ended without agreement. Workers threatened strikes over job cuts and plant closures. The powerful IG Metall union is at odds with Volkswagen management as they negotiate new labor deals for 130,