Photo: Volkswagen
The automotive industry is more than just companies that build and sell cars, as those vehicles use parts made by third parties, usually described as suppliers.
These suppliers can make or break a business, as the prices negotiated with them could mean the difference between and expensive car and an affordable model. The level of quality is also an issue, as well as their track record for consistency.
When things go wrong with suppliers, automakers get in trouble. If you disagree on that, think of the Takata airbag recall. It affects multiple automakers, and Takata is an OE part vendor at the end of the day.
The mighty Volkswagen Group has also been affected by its suppliers, but not like you would think. The largest automaker in the world (for now) has been in a dispute with two of its suppliers after a failed negotiation attempt regarding component prices.
The disagreement was so acute that ES Automobilguss has stopped delivering cast iron parts required to build gearboxes for the Volkswagen Golf, which has led to a temporary halt in production at the automaker’s main facility, located in Wolfsburg.
The second supplier, Car Trim, which is a sister company of ES Automobilguss, since they are both part of Prevent DEV, has stopped delivering seat covers earlier this month.
Because of the issue regarding the supplier’s reported refusal of meeting Volkswagen’s requested price cuts, production at two other Volkswagen facilities (Zwickau and Kassel) in Germany was affected.
Approximately 10,000 Volkswagen workers at the Wolfsburg base facility had their hours cut because of the problem, which analysts estimate that would cost about $45 million (40 million euros) per week.
Olaf Lies, the Economy Minister for Lower Saxony, has described the decision as “incomprehensible,” and stated that it is a heavy burden for the automaker and its employees.
Volkswagen’s lawyers have obtained an order from the state court of Lower Saxony, which ruled that the automaker can seize car parts from the two suppliers who are refusing to deliver them.
In layman’s terms, Volkswagen can send trucks to the provider and fill them with the required components, all under the supervision of bailiffs. The action is unforeseen in the German car industry.
ES Automobilguss has already appealed the decision, The Local notes, but it still has to comply with the order until a judge handles the request. Both sides have refused to comment on the matter, but it is clear that Volkswagen will not build Golf models between August 20-29.
When things go wrong with suppliers, automakers get in trouble. If you disagree on that, think of the Takata airbag recall. It affects multiple automakers, and Takata is an OE part vendor at the end of the day.
The mighty Volkswagen Group has also been affected by its suppliers, but not like you would think. The largest automaker in the world (for now) has been in a dispute with two of its suppliers after a failed negotiation attempt regarding component prices.
The disagreement was so acute that ES Automobilguss has stopped delivering cast iron parts required to build gearboxes for the Volkswagen Golf, which has led to a temporary halt in production at the automaker’s main facility, located in Wolfsburg.
The second supplier, Car Trim, which is a sister company of ES Automobilguss, since they are both part of Prevent DEV, has stopped delivering seat covers earlier this month.
Because of the issue regarding the supplier’s reported refusal of meeting Volkswagen’s requested price cuts, production at two other Volkswagen facilities (Zwickau and Kassel) in Germany was affected.
Approximately 10,000 Volkswagen workers at the Wolfsburg base facility had their hours cut because of the problem, which analysts estimate that would cost about $45 million (40 million euros) per week.
Olaf Lies, the Economy Minister for Lower Saxony, has described the decision as “incomprehensible,” and stated that it is a heavy burden for the automaker and its employees.
Volkswagen’s lawyers have obtained an order from the state court of Lower Saxony, which ruled that the automaker can seize car parts from the two suppliers who are refusing to deliver them.
In layman’s terms, Volkswagen can send trucks to the provider and fill them with the required components, all under the supervision of bailiffs. The action is unforeseen in the German car industry.
ES Automobilguss has already appealed the decision, The Local notes, but it still has to comply with the order until a judge handles the request. Both sides have refused to comment on the matter, but it is clear that Volkswagen will not build Golf models between August 20-29.
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