Volkswagen Cutting Hours At 3 German Plants

Volkswagen Company will reduce working hours at its Wolfsburg base and lower production output at two more German locations. The reduction affects more than 10,000 employees. The problems are due to supply issues caused by a supplier not following through with delivery commitments.

VW said Wednesday that this is affecting production. A vendor known as ES Automobilguss has quit delivering the cast iron parts used to make the gearboxes.

“Our consortium is in a legal dispute with Volkswagen and is obliged maintain confidentiality.” A representative for ES Automobilguss said in an email. There were no further details.

A spokesman at Volkswagen’s headquarters in Wolfsburg said lowering employee hours were a possible resolution to supply issues, but they haven’t made the decision yet.

The plans to shorten hours of 60,000 people at the Wolfsburg factory is the most recent escalation. Volkswagen is also still trying to recover from their diesel-emissions scandal.

VW’s gearbox-making facility in Kassel and car plant in Zwickau are the other two plants hurt from lower working hours.

The disruptions coincide with similar issues in Emden, VW’s northern German plant. At this location, a sister company known as Car Trim GmbH ended seat cover deliveries earlier this month. Both companies are part of the Wolfsburg Prevent DEV GmbH.

VW has stopped production at their Emden plant for five days from Aug. 18-24. Nearly 8,000 of their 9,000 employees are losing hours each day, and they have lost production of 6,250 cars.

What’s Next?

Analysts at Swiss Bank UBS said Thursday that if this dispute results in production cuts at the two plants, the financial impact “could be more severe than initially expected” with the reduced production at Emden.

Battling with an emissions test cheating scandal that has cost VW billions, analysts expect them to seek price cuts from their suppliers to lower the costs.

In June, VW said they would incorporate component units in hopes of saving costs and raising efficiency from a single unified management and strategy.

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