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Variance

Improve productivity or shut down, VW boss warns

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Variance    0

Improve productivity or shut down, VW boss warns

MATT MOORE / AP Business Writer

FRANKFURT, Germany - Volkswagen AG's flagship brand must improve productivity and operations considered to be uncompetitive could be shut down, the head of the brand said.

Wolfgang Bernhard, who heads the VW brand of Europe's biggest automaker, set a goal of raising productivity 30 percent within three years as the brand _ which makes the Golf, Polo and Passat, among others _ strives to improve performance and carve out a better presence in American and Chinese markets.

Bernhard also warned that some parts of component production at VW were "far from any competitiveness" and must be improved or else.

"We must consider closing those operations that are far from being competitive. Or we find a partner that will take over these activities who is in a better position to secure jobs," he said in an interview with the company's in-house magazine, autogramm, published Monday.

Bernhard said the productivity goal was realistic.

"First projects show us, that this is possible," he was quoted as saying, adding that VW takes twice as long to produce a car than does the company's rivals, such as DaimlerChrysler AG.

Volkswagen said Friday that up to 20,000 jobs could be eliminated in the next three years under a restructuring plan that is part of the company's push to trim costs at home and improve its tiny U.S. market share.

The company reported a preliminary 2005 net profit of 1.1 billion euros ($1.3 billion), up 61 percent from 697 million euros the previous year.

Despite the improvement, Brand said that traditional VW plants "accounted for a high three-digit million euro loss," without elaborating.

The company is set to announce the details and final figures from 2005 and the fourth quarter at its annual meeting March 7 in Wolfsburg.

Shares of Volkswagen, which surged 10 percent Friday, were up 2.7 percent to 56.90 euros ($68.10) in Frankfurt trading on Monday.

Link: http://detnews.com/apps/pbcs.dll/article?A...397/1148/AUTO01

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MyerShift    7

But I thought Volkswagen didn't want to reorganize and become efficient, instead keeping focused on protecting the worker or something like that. Wouldn't this be counterproductive and not truly accomplish anything by merely shutting down certain areas?

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