INGOLSTADT, Germany -- A new labor agreement for Audi workers will yield annual savings of $189.5 million starting in 2006, says Horst Neumann, Audi AG board member in charge of human resources.
In an interview with Automobilwoche, a sister publication of Automotive News, Neumann said $171.9 million in annual savings will result from lower payroll costs and the remaining $17.6 million from decreased overhead.
Audi and its unions reached the deal in April. The agreement runs through 2011 and is designed to cut wage and salary costs by 2.8 percent as of Jan. 1.
Supplemental pay will keep employees from losing income. Funds for those payments will come from a restructuring of Audi pay grades and responsibilities.
The agreement opens the door to further savings by using workers more flexibly and operating factories at higher capacity.
Neumann also said the $189.5 million in savings was a gross sum that doesn't take employee incentive pay into consideration.
Under the agreement, employees receive 10 percent of future income growth.