Reports in Germany say that Volkswagen has cancelled contracts with a major supplier in Bosnia that stopped its production lines a few years ago.
Deutsche Welle (DW) reports that VW has now cut ties with the parts supplier that led to significant disruption at Volkswagen plants in Germany in August 2016. The sudden cessation of supplies from component manufacturers ES Automobil Guss and CarTrim, subsidiaries of Prevent Group, was serious enough to impact operations at Volkswagen sites across Germany in Emden, Zwickau, Kassel, Salzgitter and Braunschweig.
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The Deutsche Welle report note that the Prevent Group has supplied Volkswagen with various car parts, from gearbox components to seat covers, often via various other supply companies and subsidiaries.
At the weekend, German newspaper Bild reported that Volkswagen had cut their ties with the Prevent Group, apparently in revenge for the manner in which Prevent had stalled Volkswagen production lines in 2016.
“Such a radical cut has not been made before in the auto industry,” an unnamed VW manager told Bild. “We don’t want to be blackmailed anymore.”
“I think it may be a case of ‘don’t bite the hand that feeds you’,” Frank Schwope, a VW specialist with German commercial bank NordLB, told DW.
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By GlobalDataDW said Prevent issued a statement saying that some 700 staff at its three eastern German subsidiaries would have to work shorter hours as a result of VW’s decision and that 90 employees at its Foamtec company in Stendal had already been dismissed.
In a response to that, a spokesperson for Volkswagen told DW that the carmaker “depends, at all times, on a reliable and trustworthy relationship with its suppliers.” Therefore, VW would regularly review its existing business ties to prevent “any negative consequences of possible supply chain disruptions” on production, customers and car dealers. “In this specific case, we had to take the necessary steps,” the statement concludes, according to DW.
The DW report also notes that the Prevent Group has announced this week that they have signed a new contract with BMW for continued supply of car seats and other upholstery products.
Bild reported that the VW decision could mean bankruptcy for Prevent, given that close to 70% of their orders come from VW.
