VW looking at shutdowns

http://iht.com/articles/2006/02/14/business/vw.php

VW looking at shutdowns
Reuters, Bloomberg News, Agence France-Presse
TUESDAY, FEBRUARY 14, 2006
FRANKFURT Volkswagen has said it is considering closing or selling unprofitable factories as part of the deep restructuring it announced last week.

The latest comments were made by the head of the VW brand, Wolfgang Bernhard, in an interview with the carmaker's internal newspaper published on Monday.

"For those areas that are far from being competitive, we have to consider closure," he said in the interview with Autogramm, "or we can find a partner to take over the activities who is better placed to safeguard jobs."

Volkswagen, the largest European carmaker, aims to lift productivity at the main West German plants of its VW brand. They have posted losses of hundreds of millions of euros, and the company said it would consider closing the least competitive parts factories.

"Those activities that are in danger must undergo a tough fitness program," Bernhard said. The company has six factories in Western Germany.

"We will improve our productivity by up to 30 percent in the coming three years," he said, adding that its factories were as much as 50 percent less productive than rivals. "The traditional Volkswagen plants have posted a loss in the high-triple-digit millions."

The company, based in Wolfsburg, also said that as many as 14,000 employees could retire as part of the effort to raise productivity by 30 percent at the Volkswagen brand during the next three years.

Those were among job cuts already flagged by the automaker. Bernd Pischetsrieder, the chief executive, said Friday that VW was considering eliminating as many as 20,000 jobs over the next three years. He is offering early retirement and severance packages to workers to get them to leave voluntarily.

Volkswagen has been trying to reduce labor costs through voluntary measures because it is bound by an agreement reached in November 2004 with employees guaranteeing their jobs in exchange for a wage freeze that will eventually save E2 billion annually.

Meanwhile, in a letter to VW employees in Germany, the head of the company's works council repeated a call from the IG Metall engineering workers' union asking management to clarify its plans and take the issue of job security as seriously as profitability.

"Management must recognize that the work force is not a rabbit that cowers in fear and paralysis in front of the snake," Bernd Osterloh, the chief employee representative, said in the letter.

GM to invest $500 million

General Motors was set to announce on Tuesday that it had made or planned to make investments totaling $500 million to help modernize five factories in Michigan, The New York Times reported from Detroit.

The automaker said it had scheduled a news conference for Tuesday afternoon at its manufacturing headquarters in Pontiac, Michigan.

A company spokesman declined on Monday night to discuss the nature of the announcement. But people with direct knowledge of the announcement who requested anonymity said the investments began last summer at the plants, which include assembly and parts operations.