VW to Cut Jobs, Production In Russia

Volkswagen AG says slumping sales, a weak ruble and no sign of economic recovery have prompted it to lower output and trim the workforce at its assembly plant in Kaluga, Russia.

The factory, which has capacity to build 150,000 vehicles per year, makes two Skoda models and the VW Polo small sedan and Tiguan small crossover vehicle.

Effective next week the Kaluga facility will reduce production from five to four days per week. The plant also will switch from three- to two-shift operations in early May and close entirely for an additional eight days in May, according to the company.

The company is sending 120 workers from Kaluga to Germany for three months of training. It will transfer some plant workers to a warehousing operation in Moscow. VW further plans to allow contracts with about 150 temporary workers to expire.

Last year VW Group sales in Russia fell 13% to 260,700 vehicle, according to the Moscow-based Assn. of European Businesses. Demand in the first two months of 2015 plunged 27% to 27,500 units.

VW insist it hasn't changed its commitment to spend €1.2 billion in Russia by 2018. The investment includes a new engine plant at Kaluga that is currently under construction.