VW's labor chief says big U.S. fines will hit workers' jobs

Reuters News
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Posted: Mar 08, 2016 5:11 AM

By Andreas Cremer

WOLFSBURG, Germany (Reuters) - Volkswagen <VOWG_p.DE> may have to cut jobs in the United States as well as Europe and other countries depending on how big a fine has to be paid for its manipulation of diesel emissions tests, the carmaker's top labor official told a meeting of 20,000 workers at its German headquarters on Tuesday.

The U.S. Justice Department has sued Volkswagen (VW) for up to $46 billion for breaching U.S. environmental laws?, while there is still no fix for nearly 600,000 cars affected in the United States almost six months after the scandal broke.

The extent to which VW may be forced to cut jobs to help meet the costs of 'Dieselgate' depends "decisively" on the level of fines, VW's works councils chairman Bernd Osterloh said on Tuesday at the meeting of workers in Wolfsburg which was also attended by the carmaker's top managers.

"Should the future viability of Volkswagen be endangered by an unprecedented financial penalty, this will have dramatic social consequences," said Osterloh, who also sits on VW's 20-member supervisory board.

Osterloh, speaking to workers at VW's flagship plant about the emissions crisis and structural changes, called on the U.S. authorities to consider the risk of possible job cuts in deciding on penalties.

"We very much hope that the U.S. authorities also have an eye for this social and employment-political dimension," he said.

Europe's largest automaker employs over 600,000 people at around 120 factories worldwide, including 270,000 in Germany. Its U.S. plant in Chattanooga, Tennnessee employs about 2,200 people.

Speaking at the Wolfsburg meeting Chief Executive Matthias Mueller said the scandal would inflict "substantial and painful" financial damage on the carmaker, without elaborating.

Volkswagen last year set aside 6.7 billion euros ($7.39 billion) to cover the expected costs of recalling of about 11 million diesel vehicles globally. It has postponed the release of its 2015 results by more than a month until April 28 to better assess the financial implications of the crisis.

"The software manipulations and its consequences will keep us busy for a long time," Mueller said on Tuesday, adding that it would take years to determine the full extent of the financial impact of the scandal.

The state of Lower Saxony, VW's second-largest shareholder, expects more "unpleasant news" to emerge over the months ahead but remains confident that the company has the financial strength to cope.

"We will this year probably every now and then be confronted with unpleasant news related to 'Dieselgate'," Stephan Weil, prime minister of Lower Saxony, told the Wolfsburg meeting.

"The damage will, on balance, not be minor, that much can already be said today, but Volkswagen luckily has a strong economic base," Weil, also a member of the supervisory board, said.

The Western German state, which holds 20 percent of VW's common shares, has "no reason" to alter its commitment to the carmaker despite the crisis, said Weil, a member of Chancellor Angela Merkel's Social Democrat (SPD) coalition partners.

MORE SUSPECTS IN GERMAN INVESTIGATION

Separately, German prosecutors said on Tuesday they have widened their investigation into Volkswagen's <VOWG_p.DE> diesel emissions scandal and are now targeting 11 more employees.

Klaus Ziehe from the state prosecutor's office in Braunschweig, Lower Saxony, which is leading the German case against VW, said 17 people were now being investigated, up from six previously.

"The number of suspects has risen, although none are from the management board," Ziehe said.

For a timeline on VW's diesel emissions scandal click

(Additional reporting by Edward Taylor in Frankfurt; Editing by Keith Weir, Greg Mahlich)