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Top VW executives mull sale of parts business

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Top VW executives mull sale of parts business

Fri Feb 10, 3:10 AM ET

FRANKFURT (Reuters) - Senior members of the supervisory board of German carmaker Volkswagen (VOWG.DE) may discuss a possible sale of its car parts operations on Friday, the Frankfurter Allgemeine Zeitung reported.

Shares in the group rose on Thursday in the belief that it could present preliminary figures for 2005 as early as Friday afternoon. The shares continued to rise on Friday, climbing 0.9 percent to 51.05 euros ($61.13) by 0805 GMT.

Volkswagen has declined to comment. The official date for full results is March 7.

Analysts have speculated about whether VW Brand Group chief Wolfgang Bernhard intends to outsource some of the group's car parts operations, such as its castings activities, to suppliers that can produce the components at a lower cost.

Such a move could potentially threaten thousands of jobs at VW's high-wage western German plants in Salzgitter, Kassel, Brunswick and Hanover.

Andreas Blechner, head of the works council at VW's Salzgitter plant, would not exclude the possibility but told Reuters that no such decision could be taken during the VW presidium meeting since it would require approval from the full supervisory board, which will not meet until February 24.

"We already have agreed to cut costs as part of the last in-house wage agreement and we have agreed to look for more potential for savings in 2007 by the next one, but it looks as if management wants to increase pressure further for additional cost cuts," he said.

A spokesman for Volkswagen declined to comment.

The Frankfurter Allgemeine reported that the presidium -- a steering committee that comprises Chairman Ferdinand Piech and Lower Saxony Premier Christian Wulff among others -- may be presented with possible disposal options.

"The closure of a factory requires at least some of the employee representatives on the board to approve it and I cannot imagine whatsoever that my colleagues would ever vote in favor of such a decision," Blechner said, adding he also could not believe a plant would be sold.

According to Paragraph 16 of Volkswagen's charter published on its website, the construction or "relocation" of a production facility would require the approval of two-thirds of the 20-person supervisory board, half of which consist of employee representatives.

Stefan Tomicic, a partner at the German law firm of Noerr Stiefenhofer Lutz specializing in labor law, believes that as long as VW management would try to manufacture the same parts or models elsewhere, then the two-thirds majority applies.

"If there was a plan to move production of a certain product or even its successor -- this would include for example the next generation of a model like the Golf -- to a different plant than where it is currently built, then Paragraph 16 would apply and two-thirds of the board would have to vote for it," he said.

Link: http://news.yahoo.com/s/nm/20060210/bs_nm/...wN5bnN1YmNhdA--

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