Volkswagen (VW), Europe's largest carmaker, yesterday ratcheted up pressure on its German unions with the announcement of intensified efforts to cut some of the thousands of domestic jobs that it maintains are surplus to its production needs.
The statement to workers by Bernd Pischetsrieder, chief executive, was the most explicit yet on the difficulties that VW faces because of overcapacity in Germany and problems in export markets.
VW has said before it hoped to reduce its workforce through natural wastage. Officials have said privately that figure was estimated about 6,000 a year.
But Mr Pischetsrieder told a workers' meeting yesterday that VW was employing several thousand workers too many in Germany.
Its flagship headquarters plant at Wolfsburg, the world's largest car factory, is seen as a particular problem and it is running at only 70 per cent of capacity.
The company has linked the overcapacity issue to the decision about where to build a new small sports utility vehicle, known as the Marrakesh, modelled on the Golf hatchback.
VW has recommended building the car in Portugal unless workers at Wolfsburg agree to work under the so-called Auto 5000 model. This would involve wage cuts of 20-40 per cent.
The plan aims to trim Wolfsburg's costs by €850 a car to move it closer to the Portuguese site, where production expenses are currently €1,000 less.
Wolfgang Bernhard, head of the VW brand, had already identified €2,000 of additional cost savings per car just to ensure the vehicle was built. The new SUV would secure 1,000 jobs in Wolfsburg, but a surplus of several thousand would still remain, the company said.
Senior executives said the SUV debate would not be a one-off. "Auto 5000 is the future of manufacturing at VW," one said. - (Financial Times Service)