By CHRIS GRAEME chris.graeme@theresidentgroup.com
Car producer Volkswagen Autoeuropa believes that optimistic signs for recovery in the international car market may mean that it can up production by 20 per cent and take on more than 100 temporary employees in Portugal.
The good news follows a difficult two years for the European car market amid a wave of rumours and speculation that Volkswagen could relocate the car plant to an Eastern European country to cut production costs, rumours which are “completely unfounded” says the company.
The company has also flatly denied Portuguese press rumours that it was being used as a German blackmail pawn in the Portuguese government’s current row with a group of powerful and influential German industrial companies over claims that one of these companies failed to deliver hundreds of millions of euros in offset benefits from the sale of two submarines to the Portuguese Navy in 2004. “We don’t make submarines,” said the company.
It had been suggested in some sections of the Portuguese press in October last year that the German Submarine Consortium (GSC) and its component companies could use its influence with German Chancellor Angela Merkel to pressurise the Portuguese Government into quietly dropping the Submarine Case in return for Autoeuropa’s continued commitment to Portugal in the coming years.
This idea mistakenly arose because Volkswagen holds a 29.9 per cent share in the industrial conglomerate and heavy goods vehicle maker MAN SE, which is the parent company of the Man Group and once detained most of Man Ferrostaal – one of the companies in the German Submarine Consortium which sold the submarines to Portugal in 2004 and failed to adequately fulfil offset obligations with the Portuguese State worth around one billion euros.
In fact, 70 percent of Ferrostaal is now held by the Abu Dhabi-based International Petroleum Investment Company (IPIC).
International and Portuguese press reports had also suggested that German strong-arm leverage had been used with Greece over the sale of problematic German submarines to the Greek Navy 10 years ago.
But although GSC companies Man Ferrostaal and ThyssenKrupp, which employ thousands of staff in Germany, are said to have a lot of lobbying clout in the German corridors of power, particularly at a time of high unemployment and economic uncertainty in Germany, the Ferrostaal subsidiary company has little or nothing to do with Volkswagen.
VW Autoeuropa spokeswoman Carmo Jardim sent out a very upbeat message for Autoeuropa’s future in Palmela near Lisbon suggesting that if the company gets a fourth vehicle, production could soar close to a full output capacity of 180,000 vehicles per annum.
“The uncertainty lies from the fact that we don’t yet know from the mother company which type of model we’re likely to get for this fourth vehicle, and a lot depends on that in terms of the number of additional employees we can take on,” she said on Friday.
The VW Autoeuropa spokesman also told the Algarve Resident that “we have absolutely nothing to do with the two submarines. We don’t even make submarines”.
Brighter future
VW Autoeuropa Executive Director Andreas Hinrichs said that VW was planning to produce more Sciroccos as well as launching new models of the VW Sharan and Seat Alhambra, despite continued difficulties in the European car market.
“This year, we expect to welcome back more than 100 colleagues, on temporary contracts, giving priority to those who have already worked for us,” he stressed with HR Director Julius von Ingelheim pointing out that Autoeuropa was a “healthy company”.
The company says it does not believe that the fourth car will be confirmed in 2010 but says that they are hopeful the decision will be taken this year.
National suppliers
The company also said that in 2009 it was able to add seven Portuguese suppliers to the VW Group network, with five suppliers for VW Autoeuropa with an overall strategy to contract more and more Portuguese suppliers.
The company went from using 51 per cent in national suppliers in 2007 to 57 per cent in 2009 which had the advantage of “reducing transport costs”.
In 2009, the plant produced 86,008 units, a fall of 8.6 per cent on the 94,100 produced in 2008 according to Financial Director Dinah J. Kamiske.
Broken down, this meant 47,277 Sciroccos in 2009, 14,636 VW Sharans, 6,215 Seat Alhambras and 17,880 VW Eos.
Autoeuropa’s gross profits shrank by 42 per cent per cent in 2009 to 20.7 million euros while sales plummeted by 16 per cent to 1.299 million.
“In my opinion, the present economic crisis in the country will not influence Volkswagen investment in Portugal. I think we will be able to produce more than 100,000 units this year, up 20 per cent on last year and take on over 100 temporary employees,” concluded Andreas Hinrichs at an informal press briefing last week.
