Panic as VW threatens to downscale investment in Portugal

news: Panic as VW threatens to downscale investment in Portugal

HE PORTUGUESE government is to negotiate directly with VW chiefs in Germany in a bid to prevent the car manufacturer stemming further investment in the country. It has dispatched Minister of Economy, Manuel Pinho, to hold round the table talks with VW bosses to secure the production of new VW models at the existing Autoeuropa plant at Palmela, writes The Resident’s Chris Graeme.

A spokesperson for the ministry, who denied rumours of face-to-face negotiations, said, “we’re doing everything we can to safeguard national interests,” while Prime Minister José Sócrates said the secret of success was in negotiation.

Earlier in the year, VW put the future of the Palmela car plant in doubt, by threatening to shift new business to more cost-effective labour countries in Eastern Europe.

The government is understood to have put forward many incentives on the negotiation table, in a bid to increase car production at Autoeuropa. Measures include financial benefits and tax cuts for new investment projects and improving the infrastructure at and around the plant itself. “The government is committed to giving the best possible incentives to VW so that it continues its development in Portugal,” said Manuel Pinho.

Recently, he met with António Chora, president of the Workers Commission (the company’s union), who asked Pinho to personally act as an intermediary with the directors of Autoeuropa. The same day, the minister held talks with them.

Autoeuropa employs 2,995 workers on full-time contracts and another 2,058 part-time, at its 1,100,000sqm site at Palmela, which was opened in April 1995 and produces the VW Sharan, Seat Alhambra and Ford Galaxy. In its first year of production, the company sold 180,000 vehicles a year falling back to 95,660 last year. Volkswagen also has operations in Brazil, Czech Republic, Slovakia, and Slovenia, all of which offer lower production costs and wages than in Portugal.

The company’s spokesperson, Dr. Julius Von Heim, refused to comment on details of negotiations but confirmed to The Resident that talks were in process.