Audi has announced that it will take over management responsibility for Volkswagen’s Brussels, Belgium assembly plant. Late last year, VW announced that it will move production of its Golf to plants in Germany, and there was speculation that the automaker would completely close the assembly plant. are now growing that the factory may be closed completely. However, VW decided that it would use the plant’s capacity to build the Audi’s new A1 entry-level car.

Under the terms of the agreement, later this year, the Audi A3 will join the production mix, and will be built along with various Volkswagen models until the end of 2009. After that, the new, compact Audi A1 (or whatever it will be called) will be built in Brussels starting in late 2009 or early 2010.

With various work rule changes, the new competitive pay and cost structures will cut personnel costs by 20 percent. The Brussels plant will help Audi meet is goal to increase production from 905,000 cars in 2006 to 1.5 million by 2015.

Audi press release after the jump.

## Source: Audi ##

PRESS RELEASE

Letter of intent signed in Ingolstadt:
Audi acquires extra production capacity

* Audi now holds management responsibility for Brussels plant
* Spotlight on job security and efficient operations
* Capacity at existing plants to rise further in order to meet demand

Audi needs additional production capacity if it is to continue growing vigorously over the next few years. To that end, AUDI AG is immediately assuming management responsibility for the Brussels plant. This is the crux of a letter of intent signed today by the company management and the Belgian trade unions in Ingolstadt. The priority for Audi is to enhance productivity at its existing German locations, while at the same time safeguarding employment. Audi already set the standard in April 2005 with the agreement entitled “Audi’s Future” for the German locations; this gave AUDI AG’s workforce a long-term guarantee of employment.

“2006 was the eleventh successive record-breaking year for Audi in respect of vehicle sales, revenue and earnings. Profitable growth is the basic ingredient of our corporate strategy. And it is a strategy that is working. We are therefore delighted to be able to add to our capacity through the Brussels plant. It will equip us for continued, vigorous growth over the next few years. We intend to build the new compact Audi model at the Brussels plant,” explained Rupert Stadler, Chairman of the Board of Management of AUDI AG.

“The Brussels plant now has the opportunity to become part of Audi’s success story. This has all been made possible thanks to the agreement to cut personnel costs by 20 percent. We are using the outstandingly qualified workforce as our basis. It is therefore particularly pleasing that, with 2,200 employees, many more jobs will be preserved than originally envisaged,” declared Dr. Werner Widuckel, Member of the Board of Management of AUDI AG with responsibility for Human Resources. Widuckel added: “The agreement is now valid without any qualification, and will be implemented in every respect.”

The framework conditions for a new general collective agreement are laid down in the letter of intent. This declares that the new, compact Audi model is to be built in Brussels from the end of 2009/start of 2010, after the establishment of competitive pay and cost structures. For a transitional period – from 2007 to 2009 – the Audi A3 is to be built in Brussels as well as various Volkswagen models. It was already successfully built there between autumn 2004 and the end of 2005. The plant’s future will be safeguarded thanks to the hub principle for products of the Audi and VW brands. Jobs can then be protected long-term at the Brussels plant.

Peter Mosch, Chairman of the General Works Council of AUDI AG, declared: “We are looking to the future in a positive frame of mind. The General Works Council and Audi’s employees are confident of rising to the forthcoming challenges. We know and have respect for our new colleagues in Brussels. Together, we now aim to take Audi forward and achieve the targets we are striving for: growth and job security.”

“Audi attaches importance not just to competitiveness – among other things based on flexible working hours involving working time accounts and reduced labour costs per hour – but also to the introduction of attractive tools such as employee profit-sharing that incorporates the criteria of productivity, quality, costs per vehicle and attendance figures,” continued Board Member for Human Resources Dr. Werner Widuckel. He added that Audi was looking to boost its attractiveness as an employer with health management measures and ergonomic working conditions. “Those also include the introduction of teamwork within the Audi production system, as well as training programmes and a continuous improvement process,” explained Audi Board Member for Production Frank Dreves. “If the proposed restructuring measures are implemented at the Brussels plant, those production operations will have a chance to play a leading role in the car industry. Following the restructuring, the Brussels plant should fulfil the criterion “best in class” in the Volkswagen Group,” added Dreves.

Representatives of Audi’s Board of Management, the plant manager, the Supervisory Board of Volkswagen Brussels and the unions had drawn up the accompanying agreement at the end of February. In a referendum, over 76 percent of the workforce had then voted in favour of it. Plant manager Norbert Steingräber stated: “That is a clear vote in its favour. The Brussels plant is determined to emerge from the restructuring process stronger and with a secure future ahead of it.”

Audi sold around 905,000 cars in 2006. It aims to increase this figure to 1.5 million by 2015. It is embarking on an investment programme worth 11.8 billion euros over the next five years as further evidence of its ambitions. The model range is set to grow from a current 22 models to 40.

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