Supplies row forces VW to cut hours at several plants | Business| Economy and finance news from a German perspective | DW | 19.08.2016
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Business

Supplies row forces VW to cut hours at several plants

Volkswagen is planning to halt production at its core factory in Wolfsburg and to cut hours at two other German plants amid a supplies shortage caused by parts makers refusing to stick to delivery commitments.

Volkswagen was planning to halt production of its venerable compact Golf at the company's headquarters in Wolfsburg due to problems with a supplier, according to an internal statement, which was confirmed late Thursday by a company spokesman. The production line in Wolfsburg, Germany, is expected to be closed for several days - foreseeably until August 29 - amid a legal conflict with the parts suppliers.

At the Wolfsburg factory alone more than 10,000 workers will be affected. The other two affected plants were in the German cities of Kassel and Zwickau, the news agency Reuters reported on Thursday, quoting two persons familiar with the matter.

Earlier on Thursday, the embattled German carmaker said that some 7,200 employees at its plant in Emden, Germany, had begun working shorter hours and that the measure would last until August 24.

A spokesman for the plant in Emden told Reuters that the measure came in response to supplier problems with a parts manufacturer, the Prevent group.

Dieselgate fallout?

Prevent has been locked in a legal battle with VW for several weeks now due to cost issues. According to the district court in Braunschweig, Germany, two of the company's subsidiaries were seeking compensation from VW for an unspecified "joint project which failed to materialize."

As a result, Prevent subsidiary Car Trim has stopped delivery of textiles for car seats to VW's in-house seating manufacturer Sitech. In addition, the Prevent group's subsidiary ES Automobilguss has halted its production of parts for gear boxes essential for several VW models.

The two subsidiaries have been acquired by Prevent group only recently. According to regional newspaper Freie Presse, their new owner had been planning mass layoffs to face mounting pressure from VW on its suppliers to reduce production costs.

Observers believe VW's pressure is linked to the massive costs of the German carmaker's emissions-cheating scandal, for which VW is expected to pay fines and penalties of more than 20 billion euros ($22.6 billion).

uhe/jm (Reuters, dpa)

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