VW intensifies cost cutting

At a Golf V conference, both product and its processes will come under scrutiny

Wolfsburg, Germany. Volkswagen AG is again stepping up efforts to boost profitability.

VW group Chairman Bernd Pischetsrieder and Wolfgang Bernhard, head of the VW brand group, want to make quick and lasting improvements to the company's cost structure by implementing new savings measures.

Bernhard is bringing several hundred specialists to a three-day "Golf V cost-reduction conference" in Wolfsburg. The conference is taking place amid continuing expensive sales incentives and eroding profits for the new Golf.

Cost-cutting measures from the conference are expected to reach manufacturing as early as this autumn. Price reductions for the Golf aren't currently planned.

"Bernhard has really made his presence felt in the short time that he has worked at VW," said one company director. In particular, he is making his case for streamlining the production process.

Bernhard wants to turn more to standardized assembly runs for the manufacture of the low-cost "3-K car" that could be built in China and Brazil. For cost reasons, he advocates "simple but clever redevelopment" of existing modules for expensive parts such as the new Golf's axles.

Pischetsrieder also wants to build up VW's international business with synergies and strengthened foreign factories.

He is working on a "global development plan" that calls for greater production volumes in Mexico, India, Malaysia and China. To this end, VW recently negotiated a deal with China's Sinopec Group to accelerate release of materials and boost local sourcing.

Pischetsrieder is looking to Winfried Vahland for solutions to problems facing the business in China.

The former Skoda vice chairman just took over as president of Volkswagen's business in China. He has been empowered to an extent that is unusual for VW and reports directly to Pischetsrieder.

Holger Kintscher, finance chief at VW's commercial vehicles division, is rumored to be taking Vahland's spot at Skoda.

Meanwhile, plans for changes in the shift structure at the Wolfsburg plant have sparked opposition. Management wants employees to work 10-hour shifts three days a week.

By eliminating night-shift premiums and special pay for Saturdays, VW hopes to save about 67 million euros a year, insiders say.

That might be difficult to accomplish. Said one work-council member: "We didn't just negotiate a labor contract only to bury it now."

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