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Volkswagen, suppliers resolve dispute following production halts

Volkswagen, suppliers resolve dispute following production halts image

Text: / Photos: Volkswagen | posted August 24, 2016 11:55

Golf, Passat production resumes

After negotiations that lasted almost 20 hours, Volkswagen has now resolved its issue with their external suppliers. . Production of its two most popular models, Golf and Passat are greatly affected. 

The root of the conflict stemmed from Volkswagen cancelling contracts from suppliers CarTrim and ES Automobilguss. Parent company DEV claimed Volkswagen's decision costed them millions of Euros as a result. CarTrim supplies seats for Volkswagen vehicles while ESAutomobilguss manufactures drivetrain components for the automaker.

Before the resolution, the suppliers were in defiance of an issuance by the Braunschweig District Court in favor of Volkswagen which ordered them to continue deliveries. The Volkswagen plants affected were Emden, Wolfsburg, Zwickau, Kassel, Salzgitter, and Braunschweig.

The Emden factory suspended Passat production that forced 7,500 employees vacant from August 18 to 24,. In the Wolfsburg factory, only some segments in the Golf's production were stopped but resulted in at least 10,000 employees forced to take their leave from earlier this week.

As for the Zwickau plant, production of both the Golf and Passat were put on hold this Monday, August 22, and affected at least 6,000 employees. The Braunschweig factory halted production of their chassis components and plastic parts from August 22. The plants affected by the supplier issue are slowly getting back to normal operations

Unaffected by the stoppage was the Kassel Factory, which handles production of some transmission and exhaust systems. Had it pushed though, at least 1,500 employees would have been idle from August 25 to 29. Another plant spared from this dispute was the Salzgitter's engine factory which was supposed to pause its operations from August 24 to 30.

With the new deal in place, CarTrim and ES Automobilguss will continue supplying parts for Volkswagen for the next six years. The new contract also allows Volkswagen to seek other suppliers as the manufacturer continues paying for the legal fees and settlements of the "Dieselgate" scandal.