VW supplier dispute raises questions surrounding German component manufacture

VW supplier dispute raises questions surrounding German component manufacture

Lower Saxony Prime Minister, Stephan Weil says he continues to feel a "little discomfort" surrounding the way this week's dispute between Volkswagen and two of its suppliers has been handled.

The almost week-long row erupted following a dispute between Volkswagen and its CarTrim and ES Automobil Guss suppliers, causing disruptions at six of the automaker's plants across Germany.

The Niedersachsen Prime Minister and his Economics Minister, Olaf Lies, sit on the Volkswagen supervisory board and while they do not take operational decisions, closely monitor the fortunes of the Wolfsburg company near to the beating heart of political power in Hannover.

"Of course he [Stephan Weil] is relieved about the agreement because it is always better than the situation we had at the beginning of the week, when we did not know when Car Trim and ES GUSS would start to deliver again," a Niedersachsen State government spokeswoman told just-auto from the Lower Saxony capital of Hannover.

"We are still wondering why CarTrim and ES Automobil Guss were not able to go just to Court. To file a claim is what you normally would do in an economic dispute.  This is why he [Prime Minister] still feels a little discomfort about how the whole thing was dealt with.

"I can imagine Volkswagen thinks about how to prevent something like that in the future. We are not doing the operational business of Volkswagen - the task of [the] supervisory board is more the overview of the company."

Had Volkswagen been forced to put its 28,000 staff on short-time working, the Federal government would have been obliged to pick up the not inconsiderable tab, leading Berlin to start taking a close eye on proceedings this week.

German practice in such cases is for the Bundesagentur für Arbeit or Federal Employment Agency to provide some salary compensation, but Volkswagen's deal with its suppliers has now avoided central government becoming involved.

The issue has thrown a spotlight on the German supply chain however, and in this case, its exposure to pressure from a relativity small set of suppliers, with the Lower Saxony government left wondering why the situation was dealt with in the way it was.

Specifics of the agreement to see normal operations restarted at Volkswagen nonetheless remain shrouded in secrecy, with the suppliers declining to reveal details, apart from to disclose components will start flowing soon.

"In the negotiations between Volkswagen, the Eastern Horizon Group, owner of the suppliers CarTrim and ES Automobilguss, an agreement was reached," said a statement sent to just-auto from CarTrim.

"The content of the agreement has not been disclosed. The suppliers take deliveries to Volkswagen shortly and production in VW continues accordingly."

Niedersachsen's government added it was: "Content we have this deal – that deliveries started again - that production can start tomorrow and people can go back to work."