* Wolfsburg HQ plant gathering planned for Wednesday
* VW CEO and works council chief to address employees
* Inefficiencies growing at VW - analyst
BERLIN, July 22 Volkswagen's chief
executive will address thousands of workers at its biggest plant
on Wednesday as he attempts to win their support for cost cuts
at the carmaker's core VW brand.
Europe's largest carmaker keeps boosting sales to new
records but profitability gains are not keeping pace with the
12-brand group's rapid expansion.
CEO Martin Winterkorn plans to cut costs by 5 billion euros
($6.74 billion) a year from 2017 as part of efforts to
streamline work processes at all levels of VW's namesake brand,
its biggest division by sales and deliveries.
After telling managers on July 14 to step up their game,
Winterkorn will on Wednesday address a special closed staff
gathering at VW's main factory in Wolfsburg, Germany that could
draw about 20,000 blue-collar workers, two company sources said.
Analysts have said the cost-cutting could expose rare
differences between management and labour at VW where employee
representatives, occupying half of the 20 seats on the
carmaker's supervisory board, enjoy considerable influence over
While there is no suggestion that the carmaker plans to cut
any jobs, the efficiency drive also indicates that VW workers in
Germany could be facing more difficult times ahead after years
of generous wage increases and annual bonus payments.
Bernd Osterloh, VW's works council chief who also sits on
the supervisory board, has urged management to cut out its own
mistakes as it reviews corporate strategy.
Management must prepare production plans - especially in
car-body making - more carefully to reduce unnecessary overtime,
and improve sales operations in foreign markets, he wrote in an
internal document dated July 17 obtained by Reuters.
"What's at stake is an intelligent use of our resources
rather than cost-cutting," said Osterloh, who will address
Wednesday's gathering after Winterkorn.
At 1.8 percent, the VW brand's first-quarter profit margin
lagged a margin target of at least 6 percent because of fixed
costs that it says are high relative to Japan's Toyota.
The VW brand's 2013 profit margin was 2.9 percent, compared
with auto division margins of 8.8 percent at Toyota and 9.5
percent at Hyundai Motor Co of Korea.
"Costs are slowly beginning to run out of control," said
Stefan Bratzel, head of the Centre of Automotive think-tank near
Cologne. "Inefficiencies are growing, that cannot be entirely
avoided at a company as big as VW."
To boost efficiency across its whole 310-model empire,
Winterkorn has urged "painful action" such as ceasing to make
low-profit cars, reining in costs of R&D as well as new
factories, speeding up model launches and catering more to the
needs of foreign markets.
"It's not just the world outside that is putting us to the
test," the CEO told managers on July 14. "We have taken a
critical look at ourselves and found that we're also dealing
with home-made problems."
($1 = 0.7418 Euros)
(Reporting by Andreas Cremer and Jan Schwartz; Editing by