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Volkswagen Business Redesign

American car sales are predicted to drop substantially in the upcoming year. Considering the current prices of oil, this is far from surprising. The downside to loss of business to car companies are the changes each firm must go through in terms of downsizing. German car maker Volkswagen said Friday that it is implementing a restructuring program that could result in the loss of up to 20,000 jobs over the next three years. The program could also lead to a reduction in production capacity, according to Reuters.

Other aspects of VW`s plan includes improving productivity and reorganizing its car part business. Shares of the company`s stock rose more than eight percent Friday following the announcement. Analysts are also predicting a better earnings for 2005 than first expected as well as a positive forecast for the upcoming year. The company released a statement saying: "In the next three years up to 20,000 direct and indirect employees within the Volkswagen Passenger Car brand could be affected by this restructuring program."

However, Chief Executive Bernd Pischetsrieder told reporters that he had no plans to close plants or disregard a wage-agreement with 100,000 workers at six German plants. The agreement protects those workers from layoffs until 2011. The company said many of the cuts will come through early retirement and voluntary termination packages.