VW's key plant hit by parts shortage in supplier row

August 17, 2016 5:28 PM EDT

General view of a Volkswagen logo in Wolfsburg, Germany September 22, 2015. REUTERS/Axel Schmidt

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BERLIN (Reuters) - Volkswagen said on Wednesday production at its largest factory had been curtailed in some areas because of a supplies shortage caused by a parts maker refusing to keep to delivery commitments.

"A supplier has suspended the contractually agreed delivery of components," VW said in an emailed statement. "This is creating a bottleneck in production" at the Wolfsburg plant which builds the top-selling Golf hatchback, the Tiguan SUV and Touran MPV as well as components.

VW declined to specify the impact of disruptions on output and staff. The Wolfsburg plant employs about 60,000 people and churns out as many as 3,800 cars per day during peak times.

German news agency Deutsche Presse-Agentur reported the disruptions earlier on Wednesday.

Grappling with an emissions-test cheating scandal that is costing VW billions of euros, Europe's largest automaker is expected by analysts to seek price cuts from its suppliers to mitigate those costs.

VW said the regional court in Braunschweig, near Wolfsburg, last week issued an injunction that forces the supplier to resume deliveries but the company has not yet complied with the ruling.

To contain the costs of the production losses, VW said it is pondering flexible working hours in some parts of the Wolfsburg plant.

Material supplies at VW's key plant will only last this week, so upholding production next week is no longer guaranteed, Bild newspaper reported on Thursday, citing an internal memo to senior managers.

A shortage of gearbox parts is also affecting production in Kassel where over 16,000 workers produce gearboxes, auto parts and electric engines, a VW spokesman said, adding the company is looking at flexible hours at that factory too.

The disruptions coincide with similar problems in Emden, VW's northern German plant where a sister company of the supplier stopped deliveries of seat covers earlier this month, two sources close to VW said.

VW on Monday said it will reduce working hours for about a third of the Emden plant's 9,000 staff, initially from Aug. 18 to 24. Working hours at Wolfsburg may be cut too next week, Bild said.

(Reporting by Andreas Cremer; Editing by Toby Chopra and James Dalgleish)

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