Volkswagen presented a concept for improving competitiveness to the IG Metall trade union at exploratory talks in Hanover on Monday. The Volkswagen AG Board Member for Human Resources, Dr. Horst Neumann, said: “The company is currently preparing the ground for a broad-based productivity initiative. However, the situation at Volkswagen makes further sustained measures necessary.” Both parties agreed on a second round of exploratory talks; a date has not yet been named.

Neumann emphasized in Hanover on Monday: “We want to negotiate with IG Metall on competitive labor costs over the next few weeks. Labor costs on a par with those applicable to the general metalworking industry put our traditional sites on an internationally acceptable level.” With this goal in mind, the company’s entire work organization was currently being restructured to drive productivity significantly forward. Optimized workflows would improve an already significant increase in quality even further. According to Neumann: “We must succeed here, as competition is setting a fast pace. Lower labor costs, high productivity and first-rate quality safeguard Volkswagen’s competitiveness. Under these conditions, capacity utilization at sites can also improve. Taken together, this is what is needed to safeguard jobs, a duty we as a company continue to take very seriously.”

He said the company had approached IG Metall with a request for negotiations because of ever-growing pressure on markets. As Neumann stated: “All parties must join together to act swiftly in creating greater competitiveness, also from a sense of responsibility towards our employees. We can’t afford to wait until 2011. We need all our employees to join forces with us now to make their jobs weatherproof.”

He commented that the outcome of the talks with IG Metall would play a decisive role in upcoming investments. As Neumann explained: “Our goal, for example, is to bring production of the next major Golf upgrade to Wolfsburg.” The first investments for this would have to be initiated during the coming weeks.

“We have to achieve significant improvements at all other traditional sites, too,” emphasized Neumann. Profitability had to be brought up to an acceptable level at Emden. Most component operations could also be returned to competitiveness through optimized work processes, a 35-hour week and effective capacity utilization. According to Neumann: “We want to fulfill the collective agreement for the future concluded in 2004. We cannot expect any relief from external factors in this regard. Our traditional sites can only win in tough international competition and safeguard jobs through their own efforts. We now need IG Metall to show us it is willing to join us.”

Regardless of the exploratory talks, the termination agreement and early retirement schemes continue. Volkswagen AG launched a comprehensive restructuring program in early 2006. The quality and production details of individual vehicle types, for example, have been systematically improved at product conventions. A “Material Cost Forum” achieved progress in purchasing. Newly-established teams integrate know-how in the fields of vehicle development and production. As Neumann said: “In terms of processes, productivity and quality, we have already set a great deal in motion. Our talks with IG Metall are a further logical part of the overall restructuring package.”

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