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Volkswagen warns of shifting production out of Germany due to fuel shortage

Volkswagen has major plants in Germany, the Czech Republic and Slovakia, among the European countries that primarily rely on fuel from Russia.


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Date updated:
September 25, 2022, 12:03 PM

File photo of the Volkswagen logo.  (Reuters)
File photo of the Volkswagen logo. (Reuters)

Volkswagen AG is looking for ways to deal with the shortage of natural gas. This includes shifting production around a global network of facilities, showing that the energy crisis unleashed by Russia’s invasion of Ukraine threatens to upend Europe’s industrial landscape.

Volkswagen, Europe’s largest automaker, said Thursday that redistributing some of its production is one of the options it has available in the medium term if gas shortages persist well beyond this winter. The company has major plants in Germany, the Czech Republic and Slovakia, which are among the European countries most dependent on Russian gas, and also has facilities in Southern Europe that source energy from elsewhere.

“As medium-term alternatives, greater localization, the transfer of manufacturing capacity, or technological alternatives are already common practice in the context of challenges related to semiconductor shortages and other recent supply chain disruptions. We focus on the means,” said Geng Wu. Volkswagen Purchasing Manager said in a statement:

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Russia’s decision to curb gas supplies to Europe has sparked fears that Germany may be forced to distribute its fuel. The news has allayed fears of a severe shortage this winter, but Germany faces the challenge of replenishing its depleted reserves next summer without any contribution from Russia.

A Volkswagen spokesman said in a telephone interview that coastal areas in southwestern or northern Europe, which have better access to seaborne liquefied natural gas cargoes, could benefit from the production shift. The Volkswagen Group already operates car plants in Portugal, Spain and Belgium, where he hosts LNG terminals.

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labor hurdles

Indeed, major production shifts from Europe’s largest economy will face major hurdles. VW has about 295,000 employees in Germany, and the employee representative makes up about half of the company’s 20-member supervisory board. Production shifts may include a limited number of vehicles rather than wholesale factory closures.

Gas supply to VW’s plants is now secured, but Michael Heinemann, managing director of VW’s power plants division, said the company is aiming to reduce gas consumption by a “mid-double-digit percentage” at its European sites. I have confirmed that it is possible.

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Still, the automaker said it was concerned about the impact of higher gasoline prices on its suppliers. Production should be reduced or stopped. ”

First issue date: September 25, 2022, 12:03 PM IST

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