Six VW Factories Halt Production Due to Supplier Dispute
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.