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VW's Wilhelm sees minor Easter production cuts

CAR maker has not taken any concrete decision on expansion in north of country, says a member of VW Bratislava's board of directors.
ABOVE the tree-spotted plain west of Bratislava rises the massive Volkswagen plant that has become a symbol of Slovakia's industrial possibilities. Over the past 10 years, VW has become the country's largest industrial concern, the largest exporter and the cornerstone of Slovakia's growing auto industry.
The German firm currently produces the Polo and Golf models, and is set to begin production of the Colorado sport-utility model this summer. In addition to finished cars, the company also produces components for export.
Although the company had predicted a 2001 decrease in production due to factory re-fits in preparation for the updated Polo platform, VW achieved a record output of nearly 182,000 cars last year, and expects this year's output to exceed 200,000. The firm also produced 331,000 transmissions and 16.7 million components in various Slovak facilities.


KARL PETER WILHELM, centre, says VW's Bratislava facility is not ideally located for recruiting workers.
photo: TASR

ABOVE the tree-spotted plain west of Bratislava rises the massive Volkswagen plant that has become a symbol of Slovakia's industrial possibilities. Over the past 10 years, VW has become the country's largest industrial concern, the largest exporter and the cornerstone of Slovakia's growing auto industry.

The German firm currently produces the Polo and Golf models, and is set to begin production of the Colorado sport-utility model this summer. In addition to finished cars, the company also produces components for export.

Although the company had predicted a 2001 decrease in production due to factory re-fits in preparation for the updated Polo platform, VW achieved a record output of nearly 182,000 cars last year, and expects this year's output to exceed 200,000. The firm also produced 331,000 transmissions and 16.7 million components in various Slovak facilities.

VW presently operates the plant outside Bratislava, a central Slovak plant in Martin, and will soon be opening the Lozorno industrial park north of Bratislava. VW has also encouraged the growth of a supply network, and counts over 45 local subcontractors.

The Slovak Spectator spoke with Karl Peter Wilhelm, a member of VW's board of directors and the company's technical spokesman, about VW's present and future in Slovakia.

The Slovak Spectator (TSS): VW has recently announced intentions to expand operations in central Slovakia, in or around the existing Martin facility. What are the concrete plans?

Karl Wilhelm (KW): Volkswagen Slovakia is a growing company. A company in such a state always has to look around. What can be done to get better performance, to grow. But you also need to develop your surroundings - your supply base, all kinds of partners, all kinds of infrastructure. Now is the time to consolidate.

In the same way that we have consolidated, we have looked at how we can develop - Martin was our first step outside of Bratislava, and more may come. But up to now there's no decision, there's nothing concrete.


TSS: Is there any reason you would choose to develop in central Slovakia?

KW: When you look at a map of Slovakia, you see our plant is located very near the Austrian border. You see that there is not a big circle in which you can gather your workers - there's a border to the west, a border to the north and a border to the south. At this location, more than 50 per cent [of over 7,000 employees] come from far away. We have to bring them in - we have temporary accommodation, we bring them by bus, by transfer and so on. So it can't be the right thing to do to put everything here near the border. This is too small an area for growth.

One of the basic principles of VW - generally, not only in Slovakia - is to bring the work to the people rather than bring the people to the work.

If you see the situation, you will see that the costs of an employee are too high compared with the international competition. This cannot be our goal and it cannot be the goal of the country. And so, in the past, we decided to go to Martin, and we transferred a number of things we had made here, but which are more easily handled there logistically. Martin at that time had many unemployed people, so it's good for the region and it's also good for us.

But again, there has been no decision. We still have space, we can still grow by 50 per cent with what we have in Martin. We have no need to do anything immediately, but if the right opportunity shows up, we will review it and make our decision.

TSS: VW world-wide has recently announced a production cutback during the Easter holidays. Will this affect Slovakia?

KW: Yes and no. You have to look at the situation over the last 10 years. We had an unexpectedly long run of growing auto production in Europe. It looks like the automotive market is at a peak. And when the market is at a peak, the only trend that can happen is a little cooling down.

This seems to be the case. Some of our competitors know this already - have known for a couple of years. VW was very lucky not to be affected so much. The Golf-Bora platform is already an older platform, and in the meantime we have the Polo, which some people say is like the 'Golf II' - in size and comfort and so on.

This car, as a new car on the market, has been well received. Even yesterday, one member of the [VW] board asked me if I could make even more cars - above the plan and the budget for March. With the Polo, we can sell every car we produce. We run the plant on three shifts, seven days a week.

For the Golf, the market is a little tougher right now. The situation is that the big Golf production plants were requested by VW not to, let's say, develop their stock too much for one week during the Easter holiday, in order to be good to the market. For our plant, as a display of solidarity, we will shut down Golf production on the Tuesday after Easter - for one day. We estimate that we will suffer a loss of about 100 cars.

TSS: The figure being quoted in the media is 15,000 cars.

KW: That's information for VW world-wide. We as a partner of VW world-wide will participate in this policy on Golf production, and we will lower production for one day only. But not for the Polo; it's not possible to work more than seven days.

TSS: In terms of industrial production, export earnings, how important is VW for Slovakia?

KW: We've grown very quickly. The investment that VW has brought to this country in the last three years is more than 1.5 billion German marks, or more than 700 million euros. Seven years ago, when I started, I knew that we would develop here, and this is why I came. But I didn't know we would get so much in such a short time.

If you look at the import and export figures and total investment, VW is a good partner for Slovakia, an important partner maybe. But we concentrate on ourselves. Right now, we're concentrating on developing the supply industry, so our partners invest and not everything is loaded on us.

TSS: VW accounts for around 17 per cent of Slovakia's export earnings. Does this lead to any pressure on you from the government to at least maintain production or operations?

KW: No. But if you're big, you have responsibility. We brought work into the country, even though Slovakia is not as big a car market as elsewhere in Europe. The investment that we've made here shows that we are looking for a long-term relationship. This is important for our employees and also for the government, I hope. It's not only our company but all the other companies we do business with - our suppliers and so on.

TSS: Does VW have any concern over the upcoming parliamentary elections? Are there any concerns VW would like to see addressed?

KW: A clear 'No'. We like to have an accountable situation. You cannot make such big investments and not have a stable surrounding. International money is fluid. If money goes into a country, it goes because there are some stable conditions.

VW has made this investment. We are not political. We talk to every politician. We are not politicians, we are car makers; we do what we can, we concentrate and do it our best. And we hope the politicians do their jobs, maybe even better.

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