The German government on Monday urged Volkswagen to solve a dispute with suppliers which the automaker said had interrupted its production at several plants.
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VW’s human resources chief Martin Rosik says the automaker has adopted shortened and flexible working hours. No details have been made public. The suppliers denied responsibility for the situation, saying Volkswagen canceled contracts without explanation or compensation and the decision to halt delivery was taken to protect their workforces. The feud over a contract with German subsidiaries of Bosnia-based Prevent Group risks adding to VW’s woes and undermining efforts to lift sagging sales and profit at its namesake brand.
“We are calling on the parties involved to come to an agreement as quickly as possible”, NiedersachsenMetall managing director Volker Schmidt said.
VW’s supplier conflict poses a threat to the company’s profitability as it seeks to recover following its diesel emissions test cheating scandal.
It has agreed to pay out $14.7 billion to settle damage claims in the United States, although some analysts have estimated the final cost of the affair at $20-30 billion dollars as further claims roll in.
Volkswagen said on Tuesday that the suppliers had agreed to re-start deliveries and that the affected plants would gradually resume production. The two sides have met to try to resolve the dispute on their own as they also battle one another in court.
The dispute pits Volkswagen against suppliers ES Automobilguss and Car Trim, and affects supplies of gearbox parts and seat covers.
“The consequences for the entire supply chain are already considerable today”, Christoph Feldmann, managing director of the association, said in a statement.
Lower Saxony is home to tens of thousands of VW workers at the group’s Wolfsburg headquarters and is also a major VW shareholder.
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Auto and parts production has already been halted at four plants and was due to be stopped at two others later this week.
