Commotion over 'ForMotion'

Wolfsburg. VW Group CEO Bernd Pischetsrieder talked tough at a board meeting to discuss the German automaker's "ForMotion" austerity plan.

Pischetsrieder demanded increased budget discipline and better management in the VW Group to ensure that his new cost-cutting program is a success.

"We have never heard him talk like that," said one board member, who did not want to be named.

"The unmistakable message was that we have to rely on our own resources, not those of others, " said Klaus Volkert, head of VW's general works council. That means that VW's suppliers face tough times.

Pischetsrieder believes that up to 800 million euros can be saved from production costs. VW suppliers are now dreading more price reductions and they may put up a fight. "It's not acceptable," said an executive from a large electronics supplier.

VW hopes to save 4 billion euros by the end of 2005 by implementing the ForMotion program, which consists of 100 different projects. One part includes moving more VW production abroad to minimize the effects of currency fluctuations.

Christian Wulff, leader of the German state of Lower Saxony, which is the largest VW shareholder, supports Pischetsrieder's plan. "There is no alternative to the program," said Wulff, a member of the German CDU political party. He added: "You could not imagine any better man for this job."

Many VW top managers have not been told all the details of "ForMotion" yet. VW's personnel chief Peter Hartz, who will head up the project, is expected to announce more details to VW executives later this month.

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