Call it job security '90s-style.
Volkswagen of America has more than doubled its sales through the first seven months of this year. Now it plans to lay off 325 white-collar workers in Auburn Hills, Mich., and Scarborough, Ontario, as it combines United States and Canadian operations.Last year, VW's U.S. sales plummeted 32 percent to an anemic 62,000. But VW is selling cars again. Sales through the first seven months of this year are up by 132 percent. VW sold more of its Jetta sedans in the first seven months of this year than its total sales for the comparable period of 1993. Its Audi division's sales are roughly flat through the fist half of the year, while VW's Canadian sales are up 31 percent through July to 16,899.
The cutbacks affect 43 percent of the German automaker's salaried North American work force. Some jobs will be eliminated in both countries.
There are now 686 workers who either work in or report to the Auburn Hills office, while 300 are in the Canadian operations. When the consolidation is complete by the end of this year, VW wants no more than 561 white-collar workers. Those losing jobs will know by Sept. 16, said VW spokeswoman Maria Leonhauser.
"It is now time to address the issue of streamlining our operations," said Clive Warrilow, president and chief executive officer of Volkswagen of America. "For the past several years, our corporate structure has been out of sync with our volume."
In short, this year's improvement isn't good enough. But why weren't these cuts made last year when VW was spending as much energy defending its No. 2 executive Jose Ignacio Lopez de Arriortua as it was in selling cars? General Motors Corp. charged that Lopez and a group of associates stole trade secrets when they left GM, where Lopez was head of worldwide purchasing for one year. Investigations are pending in Darmstadt, Germany, and Washington, D.C.
"Frankly, if we had tried to do this last year the perception would have been that we were pulling out of the market," Leonhauser said.