December 15, 2015 / 2:32 PM / 2 years ago

Volkswagen to shed 600 temporary jobs at German plant to cut costs

BERLIN (Reuters) - Volkswagen will cut about 600 temporary jobs next year at a factory in Zwickau, Germany, as it seeks to cut costs in the wake of the emission tests scandal, labor representatives said on Tuesday.

A Volkswagen company logo sits atop the VW factory in Wolfsburg, Germany November 20, 2015. REUTERS/Ina Fassbender

Plant utilization at Zwickau, where the Golf hatchback and the Passat saloon are built, will be reduced next year with a compulsory holiday for staff.

Management also plans to stop producing its premium Phaeton car, whose body shell is also made at Zwickau, pending the introduction of an all-electric version in about three years’ time, the labor officials said.

“We must now adapt to a new situation in which job protection will become more important again than the creation of further employment,” said Jens Rothe, head of the works council of VW’s operations in the eastern German state of Saxony.

The retrenchments were announced at a staff gathering in Zwickau where 8,800 people are employed, and may precede further changes at VW’s glass-walled factory in Dresden where its 500 workers will be briefed on Wednesday about the plant’s future use.

Analysts have been puzzled that VW’s new Chief Executive Matthias Mueller, who has pledged to leave no stone unturned in his cost-cutting drive, had ruled out shutting the glitzy Dresden site where falling demand for the Phaeton has shrunk production of the carmaker’s most expensive VW-branded model to less than eight cars per day.

“Production of the Golf and Passat models at Zwickau will be optimized further next year and (work) processes will be organized in an even more economical way,” VW said, without commenting on planned changes at Dresden.

Meanwhile management and labor leaders at VW’s Porsche arm are in talks with the goal of offering at least some of VW’s 600 temporary workers the chance of employment at the sports-car maker’s two German factories, Porsche’s works council said.

The jobs of more than 10,000 permanent workers at VW’s three Saxony-based sites in Zwickau, Chemnitz and Dresden are protected by the carmaker’s production plans, while another 160 temporary workers will be moved into open-ended employment, labor representatives said.

Wolfsburg-based VW plans to cut 1 billion euros ($1.10 billion) from its 2016 investment plan and cease unprofitable models such as the Eos convertible and Skoda’s Roomster van as it is pushing a new company structure and greater emphasis on electric-car offerings.

VW’s top labor leader Bernd Osterloh has said the jobs of temporary staff at the main plant in Wolfsburg and at a factory in Emden which together employ over 60,000 people will be safe for the first quarter of next year.

But there could be risks to jobs should the decline in sales persist. The manufacturer’s core passenger-car division is heading for its first annual drop in deliveries in about a decade after sales slipped 2.4 percent in November.

Editing by Greg Mahlich

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