Discussion for "Economic Framework for Production of New Model in Emden Established"

[ASurroca]

12 October 2005
Economic framework for production of new model in Emden established

Wolfsburg / Emden, 12 October 2005 - Plant management, Works Council and the IG Metall trade union have created the economic conditions for the production of a new vehicle in Emden. Annual savings at Emden of some 80 million Euro have been achieved in the context of the present collective bargaining arrangements. The Volkswagen brand Board of Management therefore decided today to begin production at Emden in 2008. The vehicle concerned is a top mid-class segment model. Model specifications will be announced at a later date.

On 26 September 2005, the Board of Management signalled its willingness to build a new model in Emden following negotiations with the General Works Council and IG Metall. However, this investment depended on the plant management and Works Council establishing the conditions for economically viable production. Those conditions have now been successfully created.

The agreement is valid for the entire plant and phased implementation will begin immediately. Key points of the agreement are as follows:

• The 28.8-hour week will continue in force for present employees, but will be spread over five working days rather than four, resulting in fewer breaks and shift allowances as well as the uncoupling of shifts
• Some mini-breaks will be abolished
• The Volkswagen subsidiary AutoVision will optimise selected logistic activities in its capacity as a personnel service provider.
• Assembly times will be reduced, and there will be leaner structures in administration and management.

Dr. Wolfgang Bernhard, Chairman of the Volkswagen brand Board of Management, said: “Our German sites must also produce at export-oriented prices. The Emden agreement is another important step towards strengthening our competitiveness.”
Peter Jacobs, Works Council Chairman at the Emden plant, commented: “Production of a new model in Germany can also make economic sense in the framework of the Volkswagen company agreement. This confirms that the job security anchored in the collective agreement is not just theory.”

Volkswagen currently produces some 200,000 Passat a year in Emden. With today’s decision, a new model range will be added to the Emden plant from 2008.

source: Volkswagen AG

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Interesting news. I'll start off the discussion...

This was first mentioned in a recent Volkswagen press-release. While the new model is still undisclosed, a few key points of this article lead me to think this could be the model above the Passat, but below the Phaeton (e.g. Mercedes CLS fighter):

1. "The vehicle concerned is a top mid-class segment model."
2. "Dr. Wolfgang Bernhard, Chairman of the Volkswagen brand Board of Management, said: 'Our German sites must also produce at export-oriented prices. The Emden agreement is another important step towards strengthening our competitiveness.'”
3. Emden is the plant that produces the Passat.

If the Passat is Volkswagen's mid-class segment model, and the Phaeton is at the top end, then what else could a "top mid-class segment model" be but the proposed CLS fighter we've been hearing about? And the fact that it will be produced side-by-side the Passat platform it will likely be built on lends to the credibility of this notion. The fact that Volkswagen is concerned with making this an export-friendly model is good news, because in my opinion, the number one reason the Phaeton was unsuccessful in the United States was the price--it was meant to compete with cars like the Lexus LS430, but because of the US Dollar's depreciation relative to the Euro, by the time the Phaeton hit the US it was priced closer to the Mercedes and BMW offerings.

Apparently, we should be getting details on this model soon.