Volkswagen to close one of two production sites in Russia -trade union

·2 min read

* This content was produced in Russia, where the law restricts coverage of Russian military operations in Ukraine

MOSCOW, July 5 (Reuters) - German carmaker Volkswagen will close one of two of its production sites in Russia, where it was assembling cars under contract with Russian GAZ Group, a trade union said, citing the company's message to the plant's staff.

Volkswagen announced in March that production at its Kaluga and Nizhny Novgorod sites would be suspended until further notice amid Western sanctions, and vehicle exports to Russia would be stopped with immediate effect.

Citing Volkswagen’s announcement to the staff made on Tuesday, the trade union "Workers' Association" told Reuters that the German company will close its operations in Nizhny Novgorod where it assembles some models at the plant owned by GAZ Group.

The Nizhny Novgorod branch will be closed due to "lack of EU-produced parts, critically important components from Ukraine and lack of domestically made equivalents, disruption of logistics chains and inability to predict the terms and conditions of resumption of work", chairman of the trade union Dmitry Trudovoy cited Volkswagen's statement to its staff.

Volkswagen declined to comment on the decision to quit production but said it would close its Nizhny Novgorod office from July 5, citing "high level of uncertainty and the inability to predict the potential resumption of production".

The bulk of its 200 staff members at the Nizhny Novgorod plant have taken pay-offs and quit voluntary and 60 people will be affected by the office closure, Volkswagen added.

According to Trudovoy, assembly equipment and other machinery will be moved to Volkswagen's Kaluga plant which it owns directly and employs nearly 4,200 workers there.

GAZ does not plan to close the plant it owns, Interfax said on Tuesday, and the company is looking for options to fill it with other orders, as production there was temporary suspended. GAZ did not reply to Reuters request for a comment.

GAZ, under U.S. sanctions since 2018, was granted sanctions exemptions annually but its latest waiver expired on May 25 and was not renewed. (Editing by David Gregorio)

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