Germany auto giant Volkswagen says a dispute with two suppliers has disrupted production at several plants and made the company decide to reduce working hours for about 27,700 employees and mitigate earning impacts.
Volkswagen announced in a statement that production halts have hit its main plant in Wolfsburg most severely where 10,000 workers are affected.
The statement added that plants in Emden, Zwickau, Kassel, Salzgitter and Braunschweig will also work through reduced hours in the coming days.
Volkswagen announced last week that it had to adjust production for some models, including the Golf and Passat, as a result of a shortfall in seating and gearbox components.
A week-long suspension of Golf and Passat production is expected to cost Volkswagen between €50 million and €100 million in operating profit.
The company said it had accordingly devised a short-time work program for employees affected by the stoppage as a strategy meant to mitigate any negative earnings impact.
The auto maker and two suppliers—Car Trim and ES Automobilguss—resumed negotiations Monday afternoon to resolve the matter after the suppliers cut delivery, the Wall Street Journal reported.
The suppliers denied responsibility for the situation, saying Volkswagen canceled contracts without explanation or compensation and the decision to halt delivery was taken to protect their workforces, it added.
Germany’s Economics Ministry on Monday urged Volkswagen and the suppliers to resolve the dispute quickly.
This comes as Volkswagen is still reeling from an emissions scandal that has already cost it billions of dollars.
Volkswagen employs 276,000 people in Germany, 73,000 of them in Wolfsburg.