Volkswagen May Cut 10,000 German Jobs

FRANKFURT, Sep 3, 2005, Reuters reported that Volkswagen could cut more than 10,000 jobs in Germany in the coming few years to make Europe's largest car maker competitive with its international rivals, a magazine said on Saturday.

Volkswagen wanted to reduce the workforce in west German plants drastically, Spiegel magazine said in a report released before publication, quoting internal VW projections.

Hit by a strong euro and weak sales, VW has been negotiating with its staff about cost-saving concessions in high-wage Germany.

Volkswagen and its main union struck a landmark labour deal in November that freezes pay for staff in western Germany, where it employs some 103,000, until early 2007 in return for job guarantees until the end of 2011.

The magazine said Volkswagen would even go ahead with the plans if it decided to build a new sport utility vehicle (SUV) at its main Wolfsburg plant. The firm is currently evaluating whether to assemble the car in Germany or in low-wage Portugal.

A Volkswagen spokesman said the report was pure speculation. "It makes no sense to join this speculation," he said.

VW's internal product strategy committee has recommended building the SUV in Portugal from 2007 rather than in Germany, saying assembling the model there would cost at least 1,000 euros less per vehicle than in Wolfsburg.

Focus magazine said Wolfsburg looked set to emerge as the assembly plant for the model but staff would then face wage cuts of some 20 percent and longer working hours.

The VW spokesman said no decision had been taken yet.

Chief Executive Bernd Pischetsrieder has warned that the future of car making in western Europe was at risk if manufacturers did not get their production costs under control.