Volkswagen Says Company Will Have to Cut German Jobs if Talks Don't Produce Savings

BERLIN October 27, 2007; The AP reported that Volkswagen AG's head of personnel said the automaker will have to make dramatic job cuts in Germany if it doesn't get the labor-cost savings it wants in ongoing wage talks, a newspaper reported Wednesday.

"If we do not implement our cost concept, our employment level in Germany will shrink dramatically," Peter Hartz was quoted as saying by the Frankfurter Allgemeine Zeitung.

"That would be a bitter thing," he said. "Because we want to secure our competitiveness -- and therefore Volkswagen jobs -- in the wage negotiations."

Volkswagen says it needs to cut costs 30 percent by 2011. It has offered to guarantee the jobs of its 176,400 workers in Germany in return for a two-year wage freeze.

Hartz's threat follows an announcement Oct. 14 by competitor General Motors Corp. that it will drop up to 12,000 jobs in Europe, about a fifth of its work force, and that most of those cuts will come at its German subsidiary, Adam Opel AG.

Big German companies, under pressure from a sluggish economy at home and increasing competition from lower-cost foreign competitors, have been increasingly pushing employees for savings in the form of longer hours and fewer breaks and perks.

Volkswagen wasn't thinking about closing plants, Hartz said. "Factory closings are not a topic with us," he said.

Hartz said the company wanted to guarantee 3,000 jobs at its Wolfsburg base making a new sport utility vehicle based on the compact Golf platform. "But that will require cost concessions," he said. "The labor costs per vehicle today in Wolfsburg are euro1,800 above those of the competition." At current rates euro1,800 is about $2,300.

Talks covering 103,000 workers at six German plants resume Thursday in Hanover.