A grownup game of keep-away is taking place in Germany, and Volkswagen is the kid without the ball.
Work stoppages are looming or already occurring at four of the automaker’s plants after a supplier dispute left Volkswagen without key transmission and seat parts. With the costly fallout of its emissions scandal top of mind, the automaker plans to waltz into the supplier’s factories and take what it needs, Automotive News Europe reports.
Golf, Tiguan and Passat production is threatened after parts stopped flowing from two suppliers in early August. Car Trim, a sister company to the other supplier, manufactures seat covers, while ES Automobilguss makes iron transmission components. The companies claim Volkswagen cancelled contracts without offering compensation, so they fought back.
Volkswagen can’t afford to have the flow of its most popular vehicles cut off, but it isn’t willing to cave. The automaker called its lawyers, and last week a German court ordered the suppliers to shape up. One of the suppliers has appealed the order.
The company behind the Love Bug and the Not-So-Clean Diesel would love to play nice, but it wants its ball back, right now. According to the German newspaper Bild, the automaker has asked the court to fine the suppliers and wants permission to enter their factories in search of parts. A decision on that order is expected next week.
“We would like to reach an amicable settlement,” a Volkswagen spokesperson for the automaker told Germany’s Manager Magazin.
Prevent, the parent company of both suppliers, issued a similar statement, though it implied that hostilities could get worse if Volkswagen stays away from the table. The automaker stands to lose $45 million a week if the work stoppages continue.
[Image: Volkswagen of America]
I don’t believe it was reported here, but VW’s operating profit for the first six months of 2016 rose 7% before one-off items. Part of the credit was given to cost-cutting, perhaps this spat is a reflection of that.
Somehow, I don’t feel the least bit sorry for Volkswagen.
They need to figure out how to make supplier agreements “win-win”.
VW is the U-Haul of the automobile manufacturing business.
Lol, no kidding. It sounds as though they are attempting to bully their suppliers.
“I require what you have, but I’ll be damned if I’ll work with you to get it.”
German arrogance at its best.
JohnTaurus,
Most all suppliers (anywhere) are “bullied”, even in retail. It’s good to see the suppliers fight back.
From my early twenties I started up a manufacturing/wholesale business and supplied a large retailer. When the time came to increase prices they didn’t want to budge.
I told them that I will not supply and I didn’t for a month or so. The company came back and offered what I wanted for my product. It was to late by then as I had already decided to end my business as I could see the Chinese threat looming.
Best decision I ever made. I left with no debt.
““I require what you have, but I’ll be damned if I’ll work with you to get it.”
#operationbarbarossa
“…and wants permission to enter their factories in search of parts”
Here’s the response they’ll get upon searching: “I know nothing – NOTHING!!”
“A couple of rogue engineers hid the parts and we in management have no idea where they are.”
Payback!
I once read an article in Forbes Magazine, in which they stated (correctly) that the relationship between an automaker and a parts supplier was that between a sadist and a masochist.
Having worked for a supplier on the VW account, I can say that they’re used to getting what they want.
I work for an Ameritalian OEM now, and while we can certainly be pushy I can’t see us essentially invading suppliers like their factory is the new Sudetenland.