Volkswagen chooses Wolfsburg for new SUV plant

Volkswagen, Europe’s biggest car maker, said on Tuesday that its new compact sports utility vehicle, the Golf Marrakesh, would be built at its plant in Wolfsburg, north Germany.

VW management had threatened to relocate production of the SUV to Portugal where unit costs were much cheaper, if the works’ council in Wolfsburg did not agree to new conditions that would effectively entail lower wages and longer working hours.

But in negotiations between unions and management late on Monday, both sides had agreed on cost-cutting of â,¬850 per vehicle so that the Marrakesh could be built in Wolfsburg, thereby securing more than 1 000 jobs at the plant, VW said in a statement.

“The way has been hard for everyone. But what’s important is that we can build the vehicle at competitive conditions in Germany and export it,” said Wolfgang Bernhard, head of the VW brand.

The Golf Marrakesh is to be built by Auto 5000 GmbH, a unit of VW that already builds the Touran compact van.

Auto 5000 uses lower-cost workers not covered by VW’s in-house wage agreement that pays the car maker’s 103 000-strong workforce some of the highest wages in the auto industry.

In return for unions agreeing to the move, VW’s management made a commitment to build a new model at its plant in Emden, north Germany, from 2008. The plant currently builds the Passat mid-size saloon and estate car.

The new model will be built under a modified wage agreement, the terms of which still had to be finalised, VW said.

Unions said the deal was justified because it would help safeguard jobs in Germany.

It “underlines the competitiveness of Germany as a manufacturing site,” said Hartmut Meine, head of the IG Metall union’s regional branch in the state of Lower Saxony.

Economy Minister Wolfgang Clement also welcomed VW’s decision to build the Marrakesh in Wolfsburg.

“The decisions shows that both sides — both management and employees — are prepared to make great efforts to safeguard production and jobs in Germany,” Clement said in a statement released in Berlin.

“They are demonstrating a great sense of responsibility and showing that it is possible, by working together, to find solutions to the demands made by globalisation.” – AFP

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