Now It's VW's Turn: 20K Workers May Be Cut

[Perian]

Link: http://biz.yahoo.com/ap/060210/volks...ing.html?.v=10


By Matt Moore, AP Business Writer
Volkswagen Warns That Up to 20,000 Jobs May Be Cut in Next Three Years Under Restructuring Plan

FRANKFURT, Germany (AP) -- Volkswagen AG warned that as many as 20,000 jobs could be cut in the next three years under a restructuring plan announced Friday, as Europe's biggest automaker tries to trim costs at home and improve its tiny U.S. market share.

"Up to 20,000 direct and indirect employees within the Volkswagen Passenger Car brand could be affected by this restructuring program," the company said in a statement after a meeting of its board.

Volkswagen, which employs more than 340,000 workers worldwide, also said it would look at "adjusting" capacity at its production plants.

The company would not give details or a breakdown for what percentage of direct employees would be cut ahead of its annual meeting March 7.

Chief Executive Bernd Pischetsrieder said the program's primary aim was not to cut jobs, but rather to bring productivity "up to international standards." Speaking at Volkswagen's Wolfsburg headquarters, he did not offer details but noted that the company has an agreement with labor unions that prevents outright layoffs.

"We have a collective agreement and it is not our intention to quit that agreement," he said. "The point is not to cut 20,000 jobs."

Pischetsrieder added that the Volkswagen brand's "earnings level is still unsatisfactory." He said last year's profit growth was due to a previously announced cost-cutting program, and also cited the company's U.S. performance.

"We continue to incur significant losses on cars exported from Germany to the USA," Pischetsrieder said. "In order to ensure a secure long-term future for the group, we must act rapidly and determinedly to eliminate the problems that we face."

The restructuring program was not viewed as a surprise by analysts, many of whom said the company was moving forward to save money so that it could ultimately spend more money developing new models for American buyers.

"They only have 1.5 percent of the market" in the U.S., noted Adam Jonas, a European auto analyst for Morgan Stanley in London.

He said that, rather than direct layoffs, the restructuring program likely would feature early retirements and divesting or spinning off component groups.

"I think about half is going to be early retirement and the other half will be from divesting the components," he said. "They need to tighten the belt so they can go out and spend money on products that can gain share in the U.S."

One of those models includes the fifth-generation Golf, on sale in Europe since 2003. A U.S. version is slated to go to market in two- and four-door versions this summer.

Article continues at link.

[Perian]

I drove a new GTI last week.

The smile is still on my face.

What an amazing car.

[mgescuro]

It's been a long while since I've driven a VW... my last one being 2.5 years ago in Salzburg.... a Phaeton.