Volkswagen halted production of its best-selling Golf hatchback on Monday as the fallout widened from an unprecedented dispute with a supplier of seat and transmission components.
The shutdown, which started with the Passat sedan on Thursday, is now set to impact about 10 percent of Volkswagen’s German workforce, the automaker said in a statement. As many as 27,700 workers across six factories could be sent home amid a shortage of parts supplied by subsidiaries of Bosnian-based Prevent Group. Golf production is set to be halted until at least Saturday.
“We are really surprised that the fight is escalating to a level where production is severely impacted,” Sascha Gommel, an analyst at Commerzbank, said in a note. “The dispute is coming during an inconvenient time for VW,” with its reputation still marred by the emissions-cheating scandal.
The company has restarted talks with one supplier after the unprecedented dispute.
Negotiations with the supplier of seat and transmission parts will resume later today, a spokesman said. Prevent Group's Car Trim seat-component division and ES Automobilguss transmission-parts unit suspended deliveries when Volkswagen refused to reimburse the suppliers after dropping a contract. The parts makers had demanded compensation of €58 million (Dh240.5m), the German newspaper Sueddeutsche Zeitung reported on Sunday.
“At least the negotiators are at the table again today,” Olaf Lies, a Volkswagen supervisory board member and economy minister of the state of Lower Saxony, where the car maker is based, said on Monday. “It will not only be about the question of the current contract, which has now been rescinded, but it will probably also be about the question of how the next months and years will look.”
The production stop at VW’s site in Wolfsburg alone could cost as much as €100m a week, UBS analysts calculated. The threat to earnings comes as the car maker seeks to boost sagging profit at its namesake brand by lowering annual spending by €1 billion. The supplier last week said Volkswagen is shifting its problems to suppliers and “exploiting” its dominant position in the market.
The order cancelled by VW involved a €500m deal with Car Trim that was scheduled to start next year, a person familiar with the matter said. The parts maker said it wants the car manufacturer to pay for the plant alterations it made to provide the services.
The conflict highlights the degree to which a parts maker can disrupt output as car builders rely increasingly on suppliers to produce a large portion of their vehicles while squeezing them to cut prices. Volkswagen, like most car makers, works on a just-in-time manufacturing principle, meaning its parts are delivered directly to the assembly line without being stored in a warehouse first. While that lowers costs, it also means that when there is a disruption from a supplier, it quickly ripples through the production chain.
Volkswagen stock has declined 10 per cent this year, compared with a 1.9 per cent drop in Germany’s benchmark DAX Index.
VW is under pressure to reduce costs as it grapples with lawsuits and regulatory investigations after disclosing last September that 11 million diesel-powered cars were equipped with software designed to cheat on emissions tests. It has set aside €18bn to cover worldwide costs related to the scandal.
Volkswagen’s works council head Bernd Osterloh said on Friday that the suppliers are being “reckless and asocial” in their disregard for workers by stopping the deliveries. VW said workers producing the Passat will be on shortened work hours until Wednesday, while Golf production will be interrupted for a week, the spokesman said.
A German court has ordered the supplier to resume deliveries, and an appeal in one of the cases has been set for August 31.
VW in the meantime has asked the court to fine the supplier and let the car maker go to the factories and load up the parts on its own, the court in Braunschweig said last week. The parts maker has until this week to respond, and the court will decide then on VW’s request, according to the release.
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UAE currency: the story behind the money in your pockets
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
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The specs
Price, base / as tested Dh12 million
Engine 8.0-litre quad-turbo, W16
Gearbox seven-speed dual clutch auto
Power 1479 @ 6,700rpm
Torque 1600Nm @ 2,000rpm 0-100kph: 2.6 seconds 0-200kph: 6.1 seconds
Top speed 420 kph (governed)
Fuel economy, combined 35.2L / 100km (est)
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Dark Souls: Remastered
Developer: From Software (remaster by QLOC)
Publisher: Namco Bandai
Price: Dh199
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
Mohammed bin Zayed Majlis
The biog
Age: 35
Inspiration: Wife and kids
Favourite book: Changes all the time but my new favourite is Thinking, Fast and Slow by Daniel Kahneman
Best Travel Destination: Bora Bora , French Polynesia
Favourite run: Jabel Hafeet, I also enjoy running the 30km loop in Al Wathba cycling track
Profile of VoucherSkout
Date of launch: November 2016
Founder: David Tobias
Based: Jumeirah Lake Towers
Sector: Technology
Size: 18 employees
Stage: Embarking on a Series A round to raise $5 million in the first quarter of 2019 with a 20 per cent stake
Investors: Seed round was self-funded with “millions of dollars”
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UAE currency: the story behind the money in your pockets
It Was Just an Accident
Director: Jafar Panahi
Stars: Vahid Mobasseri, Mariam Afshari, Ebrahim Azizi, Hadis Pakbaten, Majid Panahi, Mohamad Ali Elyasmehr
Rating: 4/5
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Aayan%E2%80%99s%20records
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The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Race results:
1. Thani Al Qemzi (UAE) Team Abu Dhabi: 46.44 min
2. Peter Morin (FRA) CTIC F1 Shenzhen China Team: 0.91sec
3. Sami Selio (FIN) Mad-Croc Baba Racing Team: 31.43sec
360Vuz PROFILE
Date started: January 2017
Founder: Khaled Zaatarah
Based: Dubai and Los Angeles
Sector: Technology
Size: 21 employees
Funding: $7 million
Investors: Shorooq Partners, KBW Ventures, Vision Ventures, Hala Ventures, 500Startups, Plug and Play, Magnus Olsson, Samih Toukan, Jonathan Labin
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SUE%20GRAY'S%20FINDINGS
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Company Profile
Company name: OneOrder
Started: October 2021
Founders: Tamer Amer and Karim Maurice
Based: Cairo, Egypt
Industry: technology, logistics
Investors: A15 and self-funded
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
Kanye%20West
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Fight Night
FIGHT NIGHT
Four title fights:
Amir Khan v Billy Dib - WBC International title
Hughie Fury v Samuel Peter - Heavyweight co-main event
Dave Penalosa v Lerato Dlamini - WBC Silver title
Prince Patel v Michell Banquiz - IBO World title
Six undercard bouts:
Michael Hennessy Jr v Abdul Julaidan Fatah
Amandeep Singh v Shakhobidin Zoirov
Zuhayr Al Qahtani v Farhad Hazratzada
Lolito Sonsona v Isack Junior
Rodrigo Caraballo v Sajid Abid
Ali Kiydin v Hemi Ahio
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
Ashes 2019 schedule
August 1-5: First Test, Edgbaston
August 14-18: Second Test, Lord's
August 22-26: Third Test, Headingley
September 4-8: Fourth Test, Old Trafford
September 12-16: Fifth Test, Oval