Thousands to lose jobs at VW as sales squeezed

5th September 2005, Comments 0 comments

5 September 2005, WOLFSBURG, GERMANY - Volkswagen staff were warned Monday that thousands of jobs must go as Europe's biggest car manufacturer cuts its payroll in line with sluggish sales of Volkswagen-brand cars.

5 September 2005

WOLFSBURG, GERMANY - Volkswagen staff were warned Monday that thousands of jobs must go as Europe's biggest car manufacturer cuts its payroll in line with sluggish sales of Volkswagen-brand cars.

Chief executive Bernd Pischetsrieder briefed workers at the giant main plant in Wolfsburg, Germany, saying those aged 53 and upwards, and possibly even those aged 52, would be offered early-retirement plans with reduced pensions till they die.

He did not say how many jobs would be eliminated at the German- based automaker, but did say it had "a personnel surplus of the order of several thousand" at its various German factories. The problem was worst at Wolfsburg, with only 70 per cent of capacity in use.

A newspaper, the Braunschweiger Zeitung, quoted Monday internal memos at Volkswagen saying the carmaker wanted to eliminate one in 10 of the 101,000 people it employs at its various German plants within the next three years.

"Despite rising sales, the company still has significant over-capacity and will therefore have to increase its efforts to shed staff," he said. Volkswagen already has a project under way to reduce staffing or shift labourers onto lower pay.

Volkswagen would reduce manning using mechanisms from its wage accord such as the early retirement deals, Pischetsrieder said.

It is common in Germany to avoid outright layoffs by offering people in their 50s an instant upgrade of their pension entitlements so that they can retire on a higher income than they would receive from unemployment benefit.

Alternative jobs for over-50 folk are rare in a country where overall unemployment is running at 10 per cent. All staff, including management, would be offered various sorts of buyout, the chief executive said.

Volkswagen stock rose 2.1 per cent to 43.31 EUR on the Frankfurt Stock Exchange after the announcement.

Pischetsrieder, who said the company would improve its pre-tax earnings compared with last year, added about 1,000 jobs would be created if an off-road version of the Golf were built at Wolfsburg, but a plant in Portugal was currently the preferred location.

He said the off-roader project had to be economic, but with the current labour contract, that was not possible at Wolfsburg. The unions would be offered terms on which Wolfsburg could take over the project.

Volkswagen aims to build a four-wheel-drive car on the same platform as the Golf to appeal to buyers unable to afford its bigger Touareg.

A German academic who tracks the automotive industry said Monday Volkswagen could conceivably cure its problem of over-capacity by closing its plant in the Belgian capital Brussels outright.

The analysis by Ferdinand Dudenhoeffer, who teaches at the automotive research centre at the Gelsenkirchen polytechnic, calculated that the group's main Volkswagen brand had an excess of production capacity equivalent to 1 million vehicles per year.

DPA

Subject: German news

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