VW settles dispute with suppliers

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Volkswagen has resolved a dispute with two external suppliers that had halted production at several plants in Germany, hitting the output of Golf and Passat models.

The suppliers, one making seats and the other gearbox parts, had stopped delivering to VW in a contract row.

However, following 20 hours of negotiations that lasted throughout the night, the two sides said they had reached an agreement.

The stoppages affected 27,700 staff.

The two suppliers at the centre of the row are CarTrim, which makes seats, and ES Automobilguss, which makes cast iron parts used in gearboxes.

They were demanding compensation from VW because they said they their incomes had been hit when VW cancelled a contract.

Car and parts production has already been halted at four plants and was due to be stopped at two others later this week. VW has 10 factories in Germany.

However, VW said both companies had agreed to start supplying it again and that the affected factories would gradually resume production.

Production stoppage

On Monday, VW told the BBC the production stoppage would not affect cars that had already been ordered.

Production at Wolfsburg, which makes Golfs, and at Zwickau where Golfs and Passats are made, is due to begin again later this week.

Production also stopped at Braunschweig, which makes chassis parts and plastic parts, but should start again next Monday.

In what the company said was an unrelated issue, production was halted at Emden, which makes Passats, last week and will resume on Wednesday.

In some cases, employees were sent home. In others, they went on to short-time working on other jobs within the plants.

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