Volkswagen to improve productivity

Volkswagen executive board member, Horst Neumann said yesterday that the German automaker plans to take further steps in improving productivity.

The company wants to increase car sales and plans to do more development and production itself rather than outsourcing activities to suppliers. Neumann said that Volkswagen plans to produce 27 vehicles per employee in 2007, up from 24 the previous year.

“A closer connection between development, purchasing and production is a major target,” said Neumann in a staff meeting at the company’s headquarters in Wolfsburg.

Neumann admitted that the utilization of the company’s plants has made a big step forward but there are still some challenges.

As part of a wide-ranging cost-cutting program, another 10,000 employees will go into early retirement by 2012, Neumann said. He also said that Volkswagen “urgently needs to find a connecting arrangement” for the time after the current early retirement program. The “international competitive pressure, especially for industrial workers, will remain extremely high,” Neumann noted.

According to earlier company statements, Volkswagen will cut 5,000 jobs between 2007 and 2009 as part of its overall restructuring effort, which includes cutting a total of 20,000 jobs. The job cuts will be done through early retirement and won’t require any layoffs.

In March, Neumann had said the program to cut 20,000 jobs could be completed in 2012 or 2013, adding that he doesn’t see any need for further cutbacks at the moment.

A labor deal signed in November 2004 rules out compulsory layoffs until the end of 2011.

Volkswagen’s headcount reduction follows similar moves by Western automakers such as General Motors Corp., Ford Motor Co. and DaimlerChrysler AG. These car companies have announced plans to cut thousands of jobs to reduce costs and regain competitiveness despite high raw-material prices and the growing challenge from Asian rivals.