Production and labor issues may derail VW’s push for top spot

Article by Christian A., on September 30, 2014

It seems that Volkswagen’s target to becoming the largest carmaker in the world in a few years’ time is currently facing a hurdle inside its organization. Relations between management and its workers have become worse overtime, as well as the current production situation at the carmaker’s main site in Wolfsburg could be an indication.

Witnesses told Reuters that the carmaker’s supposedly automated e-Golf assembly line at the plant has been teeming with worker handing metal sheets to robots. VW saw the need for such improvisation after the e-Golf failed a simulated crash test in the United States. Planners have decided to make the electric car’s frame stiffer, there were just not spaces to install extra robots on the already crowded assembly line.

The carmaker’s core VW brand has seen its operating profit drop by a third in the first half of 2014 -- no thanks to lower sales, a weak dollar, and large spending on technology like its MQB modular platform.

The platform is a core part of VW’s goal of surpassing Toyota Motors Corp. as the No. 1 carmaker in the world as it allows the German carmaker to build a huge variety of car sizes and shapes on a single production line.

The MQB in effect hikes flexibility while reducing assembly costs. But the current problem at Wolfsburg means that MQB could lead to serious issues. While it is design to easily build different models on a single line, the platform has instead delays and forced overtime on some assembly lines, company sources and production staff told Reuters.

Likewise, Volkswagen cannot just implement any major moves at its plants or even restructure them – simply because labor unions have asserted their power inside the company. Labor leaders, as well as the state of Lower Saxony, control the majority of Volkswagen's supervisory board, a powerful body that appoints and dismisses members of the management.

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