VW says no plans for now to shift Skoda production

BERLIN (Reuters) - Volkswagen (VOWG_p.DE) said on Friday there were no plans at present to change where Czech subsidiary Skoda makes its cars, as it seeks to allay the fears of unions and politicians in the republic about losing work to Germany.

Skoda's main union on Thursday threatened to cut back on overtime work if the VW group were to shift output to Germany.

Facing possible cuts in production capacity at home, Volkswagen managers and labor leaders want to benefit from Skoda's success by taking on some of the Czech company's work in Germany and make the lower-cost stablemate pay more for shared technology, company sources have said.

In particular VW workers' representatives are demanding the transfer of some Skoda production to their underused German plants to offset declining output of the VW Passat and ageing Golf that could otherwise threaten more jobs.

"At the present time, no changes (in production) are planned for the Skoda brand," a spokesman at VW's Wolfsburg headquarters said on Friday.

However, tensions between VW's various carmaking brands are expected to rise ahead of a Nov. 17 supervisory board meeting which is due to approve annual investment budgets across the group.

Skoda Chief Executive Bernhard Maier has told staff that the Czech unit would only make use of VW's wider manufacturing network to cope with peaks in demand, according to a letter sent to employees which was seen by Reuters on Friday.

Skoda now ranks as VW's second most profitable car brand behind Porsche and production capacity at its three Czech plants is stretched to the limit.

The company will have to consider raising capacity to be able to meet customer demand, Maier said.

"To meet the large customer interest in our cars, we continue to rely on the effort and flexibility of the entire workforce and the constructive cooperation with the (Czech) KOVO union," he said in the letter to staff.

"As a matter of principle, our Czech factories are and will remain first choice," he added.

(Reporting by Andreas Cremer and Jan Schwartz; Editing by Greg Mahlich)