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Six VW Factories Halt Production Due to Supplier Dispute

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Aug. 22, 2016—Volkswagen has been forced to cease production of its Golf and Passat models at six German factories after suppliers cut off deliveries because of a dispute with the automaker, according to a report from Bloomberg.

VW received transmission and interior parts from the supplier. The shutdown affects nearly 10 percent of VW’s German workforce and could cut profits by about $79 million per week. 

According to Prevent Group, the Bosnian-based supplier, VW has tried to pass along the effects of its diesel scandal on to suppliers, and Prevent has had to take a stand in order to ensure its own survival, according to Bloomberg. Prevent said that VW has refused to reimburse the suppliers for modifications made at factories in anticipation of a contract that fell through. The supplier is seeking 58 million euros in compensation. 

“Volkswagen continues its efforts to reach agreement with the suppliers,” the carmaker said in a statement, according to Bloomberg. The two sides are holding an emergency meeting on Monday to attempt to resolve the dispute out of the courtroom, while still battling in it. 

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