More than 27,700 workers at six Volkswagen plants hit by production problems

Volkswagen says it's facing production delays at more than half its German plants because of a row with two suppliers. The dispute could cost the automaker tens of millions of euros on top of the cost of the emissions scandal.
Volkswagen plant in Wolfsburg, northern Germany, on March 7, 2016.
Volkswagen plant in Wolfsburg, northern Germany, on March 7, 2016. PHOTO: AFP

FRANKFURT (REUTERS) - Volkswagen on Monday (Aug 22) said it faced production delays at six plants including its main Wolfsburg factory following a dispute between Europe's largest carmaker and two of its suppliers.

Volkswagen's (VW) supplier conflict poses a threat to the company's profitability. Analysts at UBS estimate that a one-week production halt in Wolfsburg results in about €100 million (S$150.6 million) in foregone gross profits.

VW said it was preparing for shortened working hours for at least 27,700 staff. "Production at several Volkswagen plants has been interrupted as a result of a halt in component deliveries by external suppliers," VW said in a statement.

VW's legal efforts to force CarTrim, which makes seats, and ES Automobilguss, which makes cast iron parts needed to make gearboxes, to resume deliveries have been without success, the carmaker said.

The suppliers are seeking compensation after saying they faced lost revenues running into tens of millions of euros after VW cancelled a contract. VW said it was continuing its seek agreement with the suppliers.

VW said 10,000 workers in production of the Golf model in Wolfsburg would revert to flexible or shorter working hours between Aug 22 and 27. Changes to the production shifts of the Passat between Aug 18 and 24 would affect 7,500 staff in Emden, Germany, the company said.

The Zwickau factory in former East Germany would also adjust the working schedule for about 6,000 staff working on Golf and Passat models. In Kassel, around 1,500 workers building transmission and exhaust systems will switch to short-term flexible working hours between Aug 25 and 29.

At the VW factory in Salzgitter, 1,400 staff making engines will change working hours between Aug 24 and 30. A further 1,300 staff making components in the Braunschweig factory will adjust their working hours between Aug 22 and 29, VW said.