VW, suppliers in talks to bury the hatchet

Embattled German automaker Volkswagen said it would hold another round of talks on Monday with two suppliers whom it blamed for disrupting production at some of VW's facilities.

ES Automobilguss, a supplier of cast gearbox components, and a producer of seat covers, Cartrim (both belonging to the Prevent supply group), had suspended their deliveries in August over a legal dispute with Volkswagen.

Although VW secured temporary injunctions ordering the two suppliers to resume deliveries, the two mid-sized firms appealed the decision, forcing VW to slash work hours at key factories and suspend the production of the popular Golf model at its main plant in Wolfsburg.

Optimism prevails

VW said production there could not be resumed before next Saturday, August 27. Also, assembly lines would stand still at a Golf and Passat facility in Zwickau in eastern Germany. All in all, 28,000 VW employees will be affected by supply disruptions in the course of the week.

The parts suppliers had accused VW of cutting several contracts without any advance warning or appropriate compensation. According to Germany's "Süddeutsche Zeitung" newspaper, the Prevent supply group is also seeking compensation from Daimler for canceled contracts.

The stand-off comes as VW is still in the throes of its biggest-ever crisis, caused by its large-scale emissions tests cheating scandal affecting millions of diesel engines worldwide.

VW Works Council chief Bernd Osterloh told Germany's "Bild" daily on Monday that he expected the worst to be over in two years, adding that the company was strong enough to survive looming compensation payments of over 25 billion euros ($28.2 billion).

Osterloh noted Volkswagen could even "emerge stronger from the scandal, should its new all-electric vehicle hit the markets in time and at a customer-friendly price."

hg/sri (AFP, Reuters, dpa)