* Dispute between labour and management rekindles
* Works council halts cooperation with management
* VW stands by turnaround plan for core brand
(Adds VW comment, detail, background and shares)
BERLIN, Feb 8 Volkswagen's works
council has accused top executives of breaching a cost-cutting
deal, risking fresh trouble at the German carmaker as it
struggles to overcome its emissions scandal.
In a letter to VW brand chief Herbert Diess, seen by
Reuters, the labour leaders said he and personnel boss Karlheinz
Blessing had breached the terms of November's "future pact" by
ruling out possible hirings in the first half of 2017 and
cutting temporary jobs more quickly and deeply than agreed.
"The ink on the contracts was hardly dry, and brand
management blatantly infringed the agreements and the spirit of
the future pact," a works council spokesman said.
VW said the pact will be implemented, but there were likely
to be tensions.
Europe's largest automaker is under pressure to make cuts at
high-cost operations in Germany to fund a shift to electric cars
and mobility services as it tries to move on from its emissions
scandal, while still grappling with billions of euros in related
Managers and labour leaders agreed in November to cut 30,000
jobs at the VW brand in exchange for a commitment to avoid
forced redundancies in Germany until 2025, a deal that leaves
profitability still lagging rivals.
But the turnaround plan won't yield the quick savings that
Diess, who was known as a cost-cutter at BMW, is
seeking as VW courts investors with a recovery strategy.
The future pact will lead to 3.7 billion euros ($4 billion)
in annual savings by 2020 and lift the VW brand's operating
margin to 4 percent that year from an expected 2 percent in 2016
-- not enough, analysts say, given the carmaker's cost-cutting
Management plans to scrap a costly night shift for the
top-selling Golf hatchback, which accounted for over half of the
Wolfsburg factory's output of 808,000 cars last year, also
contradict the future pact, according to the letter signed by
works council boss Bernd Osterloh and nine other labour
To pressure executives to comply with the November
agreement, labour leaders said they would halt cooperation on
issues such as overtime work, reducing the number of
apprenticeships and possibly extending the workweek to 40 hours
VW shares closed 1.4 percent lower on Wednesday at 139.90
Osterloh, the top labour representative on the 20-strong VW
supervisory board, has clashed repeatedly with Diess over where
to make savings ever since Diess joined VW in July 2015.
The signatories called on the former BMW executive and
Blessing to explain by Monday how management aimed to help
resolve the dispute.
Germany's Manager Magazine reported news of the letter
earlier on Wednesday.
($1 = 0.9339 euros)
(Reporting by Andreas Cremer; Editing by Mark Potter/Ruth