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VW supplier clash stops output at six plants VW supplier clash stops output at six plants
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Volkswagen has been thrown into another crisis after the German carmaker was forced to halt production at six plants and cut the hours of nearly 28,000 workers due a dispute with a supplier. Volkswagen has been thrown into another crisis after a dispute with a supplier forced it to halt production at six plants and cut the hours of nearly 28,000 workers.
VW has been forced to take drastic action after a company that supplies it with gearbox parts and seat covers stopped deliveries. The move affects some of its biggest factories, which produce the popular Passat and Golf models as well as engines and exhausts. VW took the drastic action because a company that supplies it with gearbox parts and seat covers stopped deliveries. The move affects some of its biggest factories, which produce the popular Passat and Golf models as well as engines and exhausts.
The company has halted manufacturing at its Wolfsburg and Emden plants for a week and will reduce hours for other workers between now and 30 August. In total, 27,700 workers are affected, with some sent home and others moved to short-time working. VW has ten factories in Germany in total. The cGerman carmaker has halted manufacturing at its Wolfsburg and Emden plants for a week and is to reduce hours of staff elsewhere between now and 30 August. In total, 27,700 workers are affected, with some sent home and others moved to short-time working. VW has 10 factories in Germany in total.
The German government has urged VW and the supplier, Prevent, to resolve the dispute. Analysts at UBS have warned that VW could take a €100m (£86.1m) hit to its profits if car production is halted for a week at Wolfsburg, where the carmaker is based. The German government has urged VW and the supplier Prevent to resolve the dispute. Analysts at UBS have warned that VW could take a €100m (£86.1m) hit to its profits if car production is halted for a week at Wolfsburg, where the carmaker is based.
The disruption to production comes almost a year after it emerged that VW had cheated diesel emissions tests in the US. The company is still trying to deal with the repercussions of the scandal, which has already costs billions of euros. VW has agreed a settlement with US authorities that will see it pay up to $15bn (£11.4bn). The disruption to production comes almost a year after it emerged that VW had cheated diesel emissions tests in the US. The company is still trying to deal with the repercussions of the scandal, which has already costs it billions of euros. VW has agreed a settlement with US authorities that will see it pay up to $15bn (£11.4bn).
VW has initiated legal action against Prevent in an attempt to force the supplier to resume deliveries. However, Prevent is holding out.VW has initiated legal action against Prevent in an attempt to force the supplier to resume deliveries. However, Prevent is holding out.
The dispute is connected to VW cancelling contracts with Prevent, which the supplier claims have cost it millions of euros. A spokesman for Prevent told German newspaper Handelsblatt that VW was imposing “unacceptable conditions” on its suppliers. The dispute is connected to VW cancelling contracts with Prevent, which the supplier claims have cost it millions of euros. A Prevent spokesman told the German newspaper Handelsblatt that VW was imposing unacceptable conditions on its suppliers.
In a statement, VW said: “Although Braunschweig District Court has issued injunctions obliging the suppliers to resume deliveries, the suppliers have not as yet met their obligations. Volkswagen continues its efforts to reach agreement with the suppliers. In a statement, VW said although a district court had issued injunctions which obliged “the suppliers to resume deliveries, the suppliers have not as yet met their obligations. Volkswagen continues its efforts to reach agreement with the suppliers.
“Given that further developments are not foreseeable, Volkswagen is making arrangements for various flexibilisation measures extending as far as short-time work.”“Given that further developments are not foreseeable, Volkswagen is making arrangements for various flexibilisation measures extending as far as short-time work.”
The government said that VW and Prevent have a “serious responsibility” to resolve the dispute. A spokesman for the economy ministry said: “We assume and also expect the companies to solve the sticking issues as soon as possible. It is about thousands of jobs, which could be affected by shorter work hours, and the responsibility to tackle these problems constructively is very high.” VW and Prevent had a “serious responsibility” to resolve the dispute, said a spokesman for the economy ministry. “We assume and also expect the companies to solve the sticking issues as soon as possible. It is about thousands of jobs, which could be affected by shorter work hours, and the responsibility to tackle these problems constructively is very high.”
Prevent owns two companies that supply VW. CarTrim makes seat covers while ES Automobilguss produces cast iron parts for the gearbox. Prevent owns two companies that supply VW. CarTrim makes seat covers while ES Automobilguss produces cast iron parts for gearboxes.
Shares in VW fell 0.5% on Monday. They are down by a quarter compared with a year ago due to the impact of the diesel emissions scandal. Shares in VW fell 0.5% on Monday. They are down by a quarter compared with a year ago owing to the impact of the diesel emissions scandal.