Giant carmaker Volkswagen AG said it has stopped production at several plants that has affected the output of Golf and Passat models in the midst of a dispute with two outside suppliers.
According to reports one of the supplier makes seats and the other produce parts of the gearboxes. Both have stopped delivering to VW in a contract row.
VW’s Car and parts manufacturing has already been stopped at four plants and will be stopped at two others later this week.
Company said the stoppages in production would affect 27,700 employees.
“Although Braunschweig District Court has issued injunctions obliging the suppliers to resume deliveries, the suppliers have not as yet met their obligations. Volkswagen continues its efforts to reach agreement with the suppliers,” said the company in a statement.
One of the supplier is called CarTrim, which makes seats, and other is called ES Automobilguss, which makes cast iron parts used in gearboxes. They are asking for compensation from VW as their incomes were hit when VW cancelled a contract.
Meanwhile VW is saying that our representatives are working hard to resolve the issue with the suppliers.
VW also said the production slowdown would not affect cars that have already been ordered. Any outcome on future production will be subject to how long the disagreement lasts.
Production units at Wolfsburg has already been stopped, which makes Golfs, and at Zwickau where Golfs and Passats are made. Production is due to begin again later this week. Assembling has been stopped at Braunschweig units, which makes chassis parts and plastic parts, but is due to start again next Monday.
Manufacturing is planned to be stopped at Salzgitter, which manufacture engines, and Kassel where transmission and exhaust system are made.
Parts production was also stopped at Emden, which manufactures Passats, last week and will recommence on Wednesday.
Reports said in some cases employees have been completely sent home, in others they are involved in short-time working on other jobs within the plants.