Volkswagen: Supplier dispute settled, car production to resume

German carmaker Volkswagen has ended a dispute with two external suppliers, meaning that production at several plants in the country can resume, a company spokesman said Tuesday.

Suppliers Car Trim and ES Automobilguss - one making car seats and the other parts used in gearboxes - had stopped delivering to Volkswagen amid a contract dispute, hitting output of the Golf and Passat models and forcing some 27,700 workers into reduced hours.

The suppliers had demanded financial compensation from Volkswagen, arguing that their incomes had been hit by the carmaker's decision to cancel their contracts.

Volkswagen responded by seeking a court injunction forcing Car Trim and ES Automobilguss to deliver their products until May 5, 2017, and February 8, 2018, respectively. It is unclear whether those dates are when the companies' current contracts end.

Volkswagen and the suppliers confirmed that the dispute had been resolved but declined to disclose details about the settlement.

The Volkswagen spokesman also declined to say when production would resume at the plants in Emden, Wolfsburg, Kassel and Zwickau.

A spokesman for the Kassel plant said later on Tuesday that the facility would return to its full production capacity on Thursday.

Stephan Weil, state premier of Lower Saxony, which has a 20-per-cent stake in Volkswagen, welcomed the end of the dispute.

"In the past few days, (the workers) fell victim to a conflict that was needlessly carried out at their expense," he said.

Volkswagen came under fire for applying for financial compensation from the government for those workers forced to reduce their hours as a result of the dispute.

"VW is asking the general public to pay for its own mistakes - this has nothing to do with responsible business conduct," said Michael Fuchs, a Christian Democrat lawmaker.

Last update: Tue, 23/08/2016 - 15:52

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