VW Board Members Meet to Shift Gears | Business| Economy and finance news from a German perspective | DW | 19.04.2006
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VW Board Members Meet to Shift Gears

Volkswagen's supervisory board will discuss the company's financial situation in two days of meetings beginning Wednesday. A new reorganization plan could eliminate 20,000 jobs at Europe's biggest carmaker.


Clouds are darkening above VW's headquarters in Wolfsburg

The new plan, created by supervisory board chairman Wolfgang Bernhard, calls for VW's German workers to return to a 35-hour work week without a pay increase as a way of lowering personnel costs, the German newsmagazine Focus reported. For the past 12 years, VW employees have worked 28.8 hours a week.

The planned job cuts, which would be made through lay-offs and early retirement options, would make 20 percent of VW's Germany-based workers redundant. The car giant's home city of Wolfsburg would be hardest hit as 10 percent of the workforce there would be cut.

26. Kunstbiennale in Sao Paolo Brasilien VW Käfer

No one is exactly sure how many strings VW is hanging by

"If we don't solve the problems now, the entire company will be in danger," Bernhard said in defence of the measures.

His plans may also call for VW to close its 5,000-employee plant in Brussels and transfer production to Germany, where a number of factories are operating under capacity.

Chief shareholders indicate approval

Bleeding red ink in both the United States and China, VW last year was barely able to surpass the break-even point while Audi, one of its subsidiaries, continues to deliver record results.

Bernd Pischetsrieder, head of VW's board of directors, has said he wants to lower the company's costs by 10 billion euros ($12.3 billion) while boosting pre-tax profits to 5.1 billion euros.

German auto industry expert Ferdinand Dudenhöffer, director of the Center of Automotive Research in Gelsenkirchen, said available capacity at VW makes the company an excellent candidate for restructuring.

"A transition to the 35-hour week without a pay increase would lead to a large improvement," he said.

Sanierung Aufsichtsrat Volkswagen

VW employees are the best paid in the German auto industry

Volkswagen workers are among the German auto industry's best paid, earning 54.69 euros per hour while Audi employees, a VW subsidy, earn 40.65 euros an hour.

While major VW shareholders Wendelin Wiedeking, head of Porsche, and Christian Wulff, state premier of Lower Saxony, have already signalled their acceptance of Bernhard's restructuring plan, protests are expected from union representatives on the supervisory board.

"They are playing a brutal game with the fears of the VW employees," works' council head Bernd Osterloh said.

Boardroom rivalry hurting company

While a decision is expected from the meeting on VW's reorganization, the issue of whether Pischetsrieder will extend his contract, which runs out next year, is less clear cut.

VW Bernd Pischetsrieder

Pischetsrieder's spot in the driver 's seat isn't quite up for grabs yet

Internal skirmishes in the VW boardroom have weighed on the company recently as both Wiedeking and Wulff have called for Pischetsrieder's contract to be extended soon, while Supervisory Board Chairman Ferdinand Piëch called the extension an "open question."

"The power struggle between Piëch and Pischetsrieder puts VW in a catastrophic position," Dudenhöffer told DW-TV. "The public image is damaged, employees are frustrated and the restructuring is being blocked at key points."

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