October 11, 2017 / 6:57 AM / 2 years ago

VW's Skoda committed to Czech Republic, plans to add jobs

PRAGUE (Reuters) - Volkswagen’s Czech carmaker Skoda Auto underscored its commitment to its home country on Wednesday, saying it was planning to add jobs there amid worries the business could lose some production to Germany.

The logo of Skoda is seen during the 87th International Motor Show at Palexpo in Geneva, Switzerland March 8, 2017. REUTERS/Arnd Wiegmann

Skoda has become Volkswagen’s (VW) second most profitable brand in terms of operating margin and is on target for record sales in 2017. But capacity is hitting a limit and its success is causing tensions inside the German car group.

Reuters reported last week that VW managers and unions were seeking to curb competition from lower-cost Skoda and move some of its production to Germany, raising worries among Czech workers.

Skoda Chief Executive Bernhard Maier told reporters on Wednesday the Czech Republic would remain Skoda’s home and that it was adding jobs locally to meet capacity demands.

“Skoda is running at the edge of its capacity, which is evidence that our strategy is working,” he said.

“At the moment, concerning global demand, we are not able to cover it from the Czech Republic, (and) for this reason we are looking around at other production capacities.”

Maier added Skoda had taken on 3,000 workers in recent months and was planning to hire more “to be able to cover rising demand.” He said Skoda was in talks with unions about this.

Skoda sold a record 1.13 million vehicles last year.

Skoda and other industry players met on Wednesday with government officials. At a news conference, Prime Minister Bohuslav Sobotka said Skoda had assured him it would do the maximum not to jeopardize jobs.

Skoda’s Czech union has warned any production shift could result in as many as 2,000 lost jobs at Skoda, which employed 28,000 at the end of 2016, excluding temporary staff.

Tensions between VW’s various carmaking brands are expected to rise ahead of a Nov. 17 supervisory board meeting due to approve annual investment budgets across the group.

Maier told staff, in a letter seen by Reuters last week, that the Czech unit would only make use of VW’s wider manufacturing network to cope with peaks in demand.

“As a matter of principle, our Czech factories are and will remain first choice,” Maier said in the letter.

The Reuters report also cited sources as saying VW wanted the Czech brand to pay more for shared technology. Asked about this on Wednesday, Maier said he saw no reason for any change.

Reporting by Robert Muller; Writing by Jason Hovet; Editing by Jason Neely and Mark Potter

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