Volkswagen's supervisory board has given the go-ahead for a deep restructuring of the group's loss-making VW brand. However, the board put off discussing the renewal of CEO Bernd Pischetsrieder's contract.
The board made it clear that VW's idyllic days are over
Volkswagen will press ahead with a deep restructuring of the group's loss-making VW brand after getting the green light from the supervisory board, the company announced Thursday.
"The goals have been defined," chief executive Bernd Pischetsrieder said of the restructuring program. "Neither I nor the concern can give any detailed information."
It will be up to the management board to hammer out the program's details with unions and employee representatives, he said.
Pischetsrieder position appears stable
The German auto giant is in full-blown crisis and is adamant that a radical restructuring -- with up to 20,000 jobs cut and an increase from the current 28.8-hour work week to 35 hours -- is the only way out.
The flagship VW brand is barely breaking even, earnings and market share are evaporating in the all-important Chinese market, and unions are angry over Pischetsrieder's drastic belt-tightening plans.
The supervisory board said the issue of the renewal of Pischetsrieder's contract, which is scheduled to expire next year, was not on the agenda, which board members said focused on "strategic issues," adding that who leads VW in 2007 would be discussed by the supervisory board at a subsequent meeting on May 2.
Supervisory Board Chairman Ferdinand Piech, who called a new contract for Pischetsrieder to be an "open question" before the meeting started, said Thursday he was "very satisfied" with Pischetsrieder's work, nearly guaranteeing a contract extension at the next meeting.
Some VWs will continue being built in Belgium
Belgian Golf plant safe
The status of a VW plant outside of Brussels was practically the only point on the agenda the executives were willing to give details on. Pischetsrieder contradicted speculation that the plant, which employees some 5,000 people, would be closed.
"We did not suggest it," he said of shutting down the factory. "I can assure my colleagues there of that."
Belgian Prime Minister Guy Verhofstadt has personally contacted VW board members to make the case for keeping the plant open and asked the company to provide a guarantee for the jobs there.
Restructuring seen as long process
Experts criticized the prolonged restructuring plans and the decision to shelve discussion on Pischetsrieder's contract.
"The outcome of the supervisory board meeting has shown that a hard restructuring program at VW is unlikely and that an agreement with employees still needs to be reached," Arndt Ellinghorst, an analyst at Dresdener Kleinwort Wasserstein told reporters.
Volkswagen executives are obviously also planning on time-consuming talks. Asked when VW's restructuring would be finished Piech said "in the year 3000."