(Bloomberg) -- As Volkswagen AG restarts output at its Wolfsburg car plant, the world’s biggest, a labor leader has warned that political fallout from the coronavirus pandemic could be more harmful than production disruptions.
The world’s largest automaker is gradually ramping up production in Europe after operations in China have almost returned to pre-crisis levels. VW’s German electric-car site in Zwickau and a factory in Slovakia started to make cars again last week after the Covid-19 outbreak halted output in March.
Bernd Osterloh, VW’s top labor leader and a supervisory board member, voiced concern about risks related to disunity among European governments, as they bicker over a deal to bolster economic recovery.
If political cooperation within the European Union stalled and the bloc’s single market disintegrated, the consequences would be dire, Osterloh said in an open letter sent to politicians across the region in recent days.
“We fear that Europe would no longer awake from such a state of double paralysis,” Osterloh said in the letter. “The foundation of our success, our jobs and our native regions would vanish irreparably.”
The comments reflect tensions running through the economy after lockdown measures shuttered factories, closed schools and confined millions of people to their homes. After companies towed the line, they now expect politicians to step up.
VW Chief Executive Officer Herbert Diess urged the government to provide incentives to bolster car sales, including aid for the production of low-emission vehicles. Speaking at the Wolfsburg site alongside the premier of Lower Saxony -- the auto giant’s home state and second-largest shareholder -- Diess said swift action is needed to encourage consumers to buy cars again.
Lower Saxony’s Stephan Weil expressed his backing for Diess’s demands and said he’ll discuss the matter with his counterparts in Bavaria and Baden-Wuerttemberg this week.
While China is VW’s largest sales region, the European market is critical to its success. The company operates factories in 20 European countries, including Italy, Hungary and Spain. They’re intertwined through complex supply chains and employ 470,000 people of a global workforce of 670,000.
The European Central Bank and governments have rolled out unprecedented aid packages to prevent economic meltdown, but talks over which funds should be tapped to fuel a broader economic recovery have sparked controversy.
“It is the freedoms of the European single market and its strength on the world stage that make us globally competitive as the EU,” Osterloh said. “In these difficult times, Germany in particular is noticing more intensely than it has for decades that our economy is not viable within national borders.”
Wolfsburg, which is adjacent to VW’s corporate headquarters, employs 50,000 people and churned out slightly more than 700,000 cars last year, almost twice as many as Tesla Inc.’s global deliveries.
©2020 Bloomberg L.P.
RECOMMENDED FOR YOU
POPULAR