published Thursday, August 7th, 2014

VW cost-cutting plan suffers setback

  • photo
    The VW logo is seen on the front of one of dozens of new Passats made at the Chattanooga Volkswagen assembly plant parked outside the plant.

Volkswagen’s $6.68 billion cost-cutting plan has suffered a major setback after labor leaders forced management to axe detailed proposals drawn up by consultants, sources told Reuters today.

The cost-cutting target itself still stands, the sources said.

The move underlines how much relations between management and workers have soured at Europe’s biggest carmaker, which is struggling to raise profits amid stagnating emerging markets and low growth at home.

Last month, VW said it would spend $600 million in Chattanooga to build a new sport utility vehicle to bolster U.S. sales. The company said it would hire 2,000 more workers to the 2,400 it already employs at the factory.

VW also plans to build a new planning and research and development center in Chattanooga.

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