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Škoda preparing for layoffs

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Germany has ended its scrapping fee programme, and the Czech Republic’s biggest company is preparing for the arrival of the real crisis.

The company’s management is already debating a new plan with union leaders, according to which the production of Fabia, the Škoda’s most popular car, would be reduced by a third.

“With the end of scrapping bonuses, we are expecting that the demand for Fabias will drop. Our maximum production capacity is 1,200 cars a day. That could be reduced to 800 to 1,000,” Holger Kintscher, economic director of Škoda Auto, told HN. The reduction could come within the next two to three months.

If we are unable to make up for this reduction by manufacturing more of other car models, we will need to first of all lay off contractors. “We are able to stay alive thanks to agency contractors,” said Kintscher and suggested that the company might adopt the same procedure as at the beginning of this year. Before the crisis, Škoda Auto had 4,000 agency contractors, but in January this number was reduced to 800. Now it has 3,000.

Škoda management is preparing unions for the worst case scenario. “If it was only a short-term reduction, people could be transferred to different positions. In the case of a more long-term reduction, around 2,000 would have to go. But the slump continues for a long time and we don’t find new markets, the company would need to lay off up to 500 full-time workers,” said union leader Jaroslav Povšík.

Fabia is the most sold Czech car, and reduced production would affect a number of suppliers. “Škoda is our key customer. We supply headlights for Fabias. If the company reduces its orders by a third we would need to lay off 25 assembly and preproduction workers,” said Marek Ryšavý, production director of Hella Autotechnik.

But according to Kintscher, Škoda will try to make up for the Fabia slump with increased production of first-generation Octavias, sold at discount prices, and the new Yeti and Superb Combi models.

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