Audi intensifies economy drive

Payroll costs should fall significantly; 19,000 jobs under scrutiny

Ingolstadt, Germany. Audi is following sister-division Volkswagen in launching a tough cost-cutting drive aimed at reducing annual personnel costs by up to 20 million euros.

Audi's managers and works council are negotiating a new labor contract to replace the Future Audi agreement that expires at the end of this year.

One major point is working-time agreements. To adjust to changing market demands, employee work schedules can be adjusted over the course of a year. But Audi personnel boss Horst Neumann wants more flexibility. He wants the freedom to adjust work schedules throughout the lifecycle of a product, often seven years.

Neumann said he also believes that there are potential savings in production labor.

Because of Audi's global growth -- the number of employees worldwide rose to 50,000 from 30,000 during the past decade -- several departments are either overstaffed or understaffed.

Neumann wants until 2006 to examine Audi's structure and "reshuffle jobs" if necessary.

He said layoffs in Germany are not being considered, but, "companywide there are 19,000 jobs that currently are under close scrutiny. ...

"We will retain the same number of staff (in Germany)," Neumann said, "but we will not increase it."

Another issue is whether overtime payments and Saturday shifts should be reduced or even abolished.

For Xaver Meier, head of the Audi works council, the priority is to insure continued use of German production sites. He said he fears that the full capacities of the Ingolstadt and Neckarsulm plants might not be used for the successors to models currently manufactured in Germany "because manufacturing times are getting shorter and shorter."

For example, the Volkswagen group has already decided to build the future Audi Q7 SUV at the VW plant in Bratislava, Slovakia. Audi production boss Jochen Heizmann said the small Q5 SUV and the A9 sports car also will be manufactured at VW plants. "Portugal, Mexico and Belgium are all possibilities," Heizmann said. He added that the decision will be made in 2005.

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