Volkswagen faces a massive restructuring in which the way employees work with each other will change. The reason: Costs for development and production have gotten out of hand at Europe's largest automaker.
Martin Winterkorn, the Volkswagen chief executive, has an austerity program to lower costs by €5 billion ($6.72 billion) by 2017. It is basically all about the VW brand, which is the heart of the world’s third-largest carmaker and by no means the earnings machine it once was.
Company returns, now at 2 percent, are just a fraction of what VW's luxury brands Porsche and Audi make. Those subsidiaries – which also include Seat, Scania, Skoda, and MAN – should fear that they too will be drawn into solving VW's brand problem.
Mr. Winterkorn is not ready for the scrap heap despite his 67 years, and he’s proven that with his austerity program.
It has the potential of fanning worker unrest and could push the firm’s most important question to the background – namely, who will be the eventual successor to the executive chair at company headquarters in Wolfsburg?
Mr. Winterkorn is not ready for the scrap heap despite his 67 years, and he’s proven that with his austerity program. He has admitted his own mistakes and has provided a clarity of vision. But being responsible for close to 600,000 VW employees is a heavy demand that even he cannot shoulder forever.
Mr. Winterkorn has called the search for a successor one of his company’s most important tasks. That was a couple of months ago, but in the meantime rumors have circulated that the chief executive’s contract could be extended two more years.
Delaying a decision would only increase mounting frustration among leaders at Volkswagen who aspire to his job. Several potential candidates who had emerged from the throng of VW management have been forced to leave, such as Karl-Thomas Neumann and Wolfgang Bernhard.
There can be little doubt about the suitability of either manager. Mr. Neumann is bringing Opel on course with some success. Mr. Bernhard is at rival Daimler, although he is not popular with workers there because of his tough stance on costs. Mr. Bernhard probably took quiet satisfaction from the fact that Mr. Winterkorn based his billion-euro austerity package on issues that Mr. Bernhard had found fault with during his time at VW.
The search for the future head of VW is about more than just personnel. It is about destructive work habits that can develop over time, including cronyism and cliques. The results can only be bad. Where cronyism is at work, unpleasant truths are suppressed to preserve careers at all costs, and critical information is not passed along to decision makers. This kind of unhealthy environment has already damaged companies such as Thyssen-Krupp, Siemens and Daimler.
So those responsible at VW are well-advised to avoid this. A good start would be to name a group of suitable candidates for Mr. Winterkorn's successor who might take over some day – and to do it soon.
Martin Murphy is an editor at Handelsblatt. He can be reached at [email protected]