Exclusive: VW seeks cost-cutting deal by Friday, devil is in the detail

Wed Nov 16, 2016 11:38am EST
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By Andreas Cremer

BERLIN (Reuters) - Volkswagen (VOWG_p.DE: Quote) is pushing for a cost-cutting deal with workers at its core brand by Friday to help fund investment in electric and self-drive cars, but accounts of discussions in just one area show how difficult it is.

The need for a turnaround plan at the VW brand has been amplified by the billions of costs it is facing for its diesel emissions scandal but union leaders do not want workers to carry the can for what they see as the mistakes of managers.

The main sticking point of the talks is how to ensure the future of its German factories as it seeks to cut some traditional roles making combustion engines in favor of new positions producing batteries and electric engines.

Neither VW nor its powerful labor unions would comment on the progress of the talks but details from three company sources of discussions over the assembly of plastic parts shed light on their complexity.

VW brand chief Herbert Diess, a former executive at BMW (BMWG.DE: Quote), which is less vertically integrated than VW, has sought to end production of some plastic parts including fuel tanks and bumpers at the Wolfsburg base, the three sources said.

In a sign of the scale of the challenge, a new 1,500-square meter hall with blow-molding technology to make more plastic tanks went on stream only in September, the sources said.

Unions have so far blocked Diess's plan, which would involve cutting several hundred of the 3,000 jobs involved in making plastic parts, an area competitors have long since outsourced.

Management and labor are also discussing the outsourcing of some production of plastic parts at Braunschweig near Wolfsburg, one of the sources said. Those talks involve compensating staff by assigning more orders for chassis and steering assembly which will become more relevant with self-driving cars.   Continued...

A general view shows the Volkswagen production site in Wolfsburg, Germany, April 28, 2016.    REUTERS/Fabrizio Bensch/File Photo