Schaeffler Group (Germany; parent of INA and FAG bearings, acquiring Continental AG) announced it has reached agreement with IG Metall, the powerful key union representing workers in Germany.

Schaeffler had been saying that more than 4,500 layoffs would be needed to cut costs and improve its finances. But the union came out in vehement disapproval, vowing to fight Schaeffler's request for German bailout funding if layoffs were included in the plan.

In exchange for supporting a no-layoffs position through June 2010, IG Metall and its members at Schaeffler will support bailout funding and have also agreed to support the company's other cost-cutting efforts.

Schaeffler said its necessary target for cost savings is in the neighborhood of €250 million (USD$350 million), to be achieved by shortening work weeks and workers accepting more flexible working arrangements along with some pay cuts.

One final piece of the agreement involves IG Metall taking an unspecified but active position in Schaeffler's ownership and/or operations. The union has at least achieved agreement to move into some of the company's supervisory board seats.

Schaeffler's future remains cloudy as it suffers with the debt load from its ill-timed takeover of Continental AG.