(Bloomberg) -- Volkswagen AG’s influential works council rejected a proposal to improve productivity by 10 percent as “unrealistic,” setting up a showdown over cost cuts at the scandal-hit carmaker.
Herbert Diess, who joined Volkswagen last year to head its namesake brand, is pushing for efficiency gains as part of an overhaul at the carmaker’s largest unit. His 12-point plan, which includes a call for cultural change and a “New Volkswagen,” has ruffled feathers among labour leaders, who blame management for the current crisis.
“We haven’t agreed to it, and that’s because we consider the targets unrealistic,” Bernd Osterloh, Volkswagen’s top labour representative and a member of the company’s supervisory board, said in an interview on a union web site. “I don’t like it all, when now others act as if everything at Volkswagen needs to be reinvented.”
An open dispute between Diess and employee representatives would complicate efforts to push through changes. Workers are unusually powerful at Volkswagen. Not only do they control half the seats on the supervisory board, like at other German companies, but they also influence the government of Lower Saxony, the carmaker’s second-largest shareholder, because of the size of Volkswagen’s workforce in its home state. A company spokesman declined to comment on Osterloh’s remarks.
‘Show Respect’
Volkswagen’s total costs for the scandal have yet to be tallied. The company has so far set aside 6.7 billion euros ($7.3 billion) so far for repairs to 11 million vehicles with engines rigged to pass emissions tests, but it also faces hundreds of lawsuits and fines from regulators.
Osterloh said workers are ready to talk about efficiency improvements and have made a series of proposals to reduce complexity and cut costs by millions of euros. But at the same time, he said Volkswagen needs to guarantee job security. He also called on the company to locate positions to steer the development of future-oriented technologies, including electric vehicles and digitalization, at its headquarters in Wolfsburg.
“I expect those that are new to the Volkswagen brand to show respect for what’s been achieved here,” said Osterloh. “We’ll need to talk about whether the targets from Dr. Diess are realistic.”
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