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VW supplier clash stops output at six plants www.theguardian.com
Volkswagen has been thrown into another crisis after a dispute with a supplier forced it to halt production at six plants and cut the hours of nearly 28,000 workers.
VW took the drastic action because a company that supplies it with gearbox parts and seat covers stopped deliveries. The move affects some of its biggest factories, which produce the popular Passat and Golf models as well as engines and exhausts.
The cGerman carmaker has halted manufacturing at its Wolfsburg and Emden plants for a week and is to reduce hours of staff elsewhere between now and 30 August. In total, 27,700 workers are affected, with some sent home and others moved to short-time working. VW has 10 factories in Germany in total.
The German government has urged VW and the supplier Prevent to resolve the dispute. Analysts at UBS have warned that VW could take a €100m (£86.1m) hit to its profits if car production is halted for a week at Wolfsburg, where the carmaker is based.
The disruption to production comes almost a year after it emerged that VW had cheated diesel emissions tests in the US. The company is still trying to deal with the repercussions of the scandal, which has already costs it billions of euros. VW has agreed a settlement with US authorities that will see it pay up to $15bn (£11.4bn).
VW has initiated legal action against Prevent in an attempt to force the supplier to resume deliveries. However, Prevent is holding out.
The dispute is connected to VW cancelling contracts with Prevent, which the supplier claims have cost it millions of euros. A Prevent spokesman told the German newspaper Handelsblatt that VW was imposing unacceptable conditions on its suppliers.
In a statement, VW said although a district court had issued injunctions which obliged “the suppliers to resume deliveries, the suppliers have not as yet met their obligations. Volkswagen continues its efforts to reach agreement with the suppliers.
“Given that further developments are not foreseeable, Volkswagen is making arrangements for various flexibilisation measures extending as far as short-time work.”
VW and Prevent had a “serious responsibility” to resolve the dispute, said a spokesman for the economy ministry. “We assume and also expect the companies to solve the sticking issues as soon as possible. It is about thousands of jobs, which could be affected by shorter work hours, and the responsibility to tackle these problems constructively is very high.”
Prevent owns two companies that supply VW. CarTrim makes seat covers while ES Automobilguss produces cast iron parts for gearboxes.
Shares in VW fell 0.5% on Monday. They are down by a quarter compared with a year ago owing to the impact of the diesel emissions scandal.
Published Date:2016-08-23
