VW halts production at six plants amidst dispute

NEW HEADACHE: A VW Golf, right, inside the car towers at VW’s plant in Wolfsburg, one of six German plants hit by production cuts. Picture: AFP
NEW HEADACHE: A VW Golf, right, inside the car towers at VW’s plant in
Wolfsburg, one of six German plants hit by production cuts. Picture: AFP

Embattled vehicle manufacturer Volkswagen (VW) says it will has halted production at six plants in Germany for several days as a legal dispute with two key suppliers deepens.

About 27700 workers would have their work hours slashed by the end of August‚ in a new headache for the group which is struggling to move past an emissions-cheating scandal that is costing billions.

VW said it had been forced to take the drastic measures after the two suppliers of gearbox parts and seat covers halted deliveries.

“Although the state court in Brunswick issued temporary injunctions requiring the suppliers to resume deliveries‚ they so far haven’t fulfilled this obligation‚” VW said.

Instead‚ the components’ manufacturers are appealing against the court decision.

While the group “wishes to achieve a result through negotiations”‚ it could also pursue legal means‚ a spokesman said.
The parts suppliers said that VW broke off several contracts with no advance warning or compensation‚ leaving them with no choice but to suspend deliveries to protect their own businesses and workforce.

A spokesman for Prevent‚ the parent company of the two firms‚ told German business daily Handelsblatt that VW was imposing “unacceptable conditions” on its suppliers.

Handelsblatt reported that VW had been seeking concessions from all of its suppliers‚ amounting to several billion euros.

The battle has also angered VW worker representatives‚ who complained that employees were paying for a battle between the manufacturer and its suppliers.

Affected factories include Emden‚ Zwickau‚ Kassel‚ Salzgitter‚ Brunswick and a key site at the firm’s Wolfsburg headquarters.
One car industry expert said that VW had left itself vulnerable as it depended on a single supplier for the critical gearbox casings.

“It should never be the case that a global company has a medium-sized company as its sole supplier‚” Ferdinand Dudenhoeffer of the University of Duisburg-Essen said.

VW is still in the throes of its biggest crisis after it admitted in September 2015 to a massive emissions-cheating scandal affecting 11-million diesel engines.

The revelation slashed the car maker’s share price by 40% — – a drop in market value of ß25-billion (R ??) – in two days.

CEC  Martin Winterkorn stepped down over the scandal‚ and prosecutors in the US said in July that his successor‚ Matthias Mueller‚ might also have known of cars’ failure to meet emissions standards as early as 2006.

VW has had to set aside billions of dollars to settle damage claims from car owners and to retrofit the affected cars. It secured preliminary approval for a $14.7-billion settlement from a California judge in July.

But several German states are examining legal action to claw back losses to pension schemes and other holders of VW shares.

The company may also be forced to pay out for environmental damages in cases brought by several US states.

Analysts have estimated the final cost of the affair at between ß200-billion (R ??) and ß30-billion (R ??)– a steep price tag even for a firm with annual sales of ß200-billion

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