RESTRUCTURING PLAN Workers Revolt Against VW Board

The works council at VW’s passenger car brand has accused the CEO and board of failing to uphold their end of the bargain in a labor dispute. The brewing fight could torpedo ambitious restructuring plans.
Quelle: dpa
Herbert Diess (L) and Bernd Osterloh together in Wolfsburg.
(Source: dpa)

An internal dispute over ambitious restructuring plans at VW’s passenger brand has flared up between the unit’s labor representatives and the executive board led by Herbert Diess.

In a letter addressed to Mr. Diess, the works council has accused the board of violating the “spirit, core and content” of a plan agreed to in November by both labor and management.

“With its actions, the board is undermining the decisions in the package,” the works council wrote in the letter, which Handelsblatt has obtained. The board’s actions are “irresponsible,” the council added.

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The works council went on to issue an ultimatum, demanding that the board explain “in writing” by Monday how it plans to cooperate with labor to implement the restructuring plan.

Bernd Osterloh, VW’s highest labor representative, also signed the letter. Mr. Osterloh is a powerful figure at VW and sits on its supervisory board. His decision to back the letter suggests that his tense relationship with Mr. Diess has deteriorated to outright confrontation.

Senior people at VW have expressed frustration with Mr. Osterloh’s position in private.

“Mr. Osterloh knows the numbers exactly,” a VW manager said on condition of anonymity. “He knows that there is no alternative to the reform package.”

But labor representatives are upset over Mr. Diess’ decision to order a hiring freeze in several areas, effectively eliminating 1,500 open positions. They have also accused the board of trying to force out as many temporary workers as possible.

Mr. Osterloh has previously accused Mr. Diess of focusing too much on cost cutting and not enough on VW employees.

The ink has hardly dried on the agreements and the board has already violated their letter and spirit. VW works council spokesman

Under the plan agreed in November, VW aims to slash €3.7 billion in annual costs through 2020. The passenger car brand has suffered for years under high costs and a low return on sales. The unit currently has a return of just 1.6 percent on sales compared to 6.8 percent at French rival Peugeot.

The financial situation at the passenger car unit has become even more tense in the wake of the diesel emissions scandal, which has cost VW more than $20 billion in damages and penalties.

VW workers are carrying the lion’s share of the cost-cutting program's burden. The automaker plans to eliminate 23,000 jobs in Germany through early retirement and part-time schemes and to cut another 7,000 jobs at its plants abroad.

The 5,700 temporary workers at VW are also less likely to be taken on board as full-time staff. In the past, temporary workers were regularly offered more stable employment after a few years.

A works council spokesman confirmed the fiery content of the letter sent to Mr. Diess: “The ink has hardly dried on the agreements and the board has already violated their letter and spirit,” the labor spokesman said.

A VW passenger brand spokesman, however, tried to smooth over the internal disagreements. Different positions will of course be discussed and joint solutions must be found, the spokesman said.

But the company remains committed to the restructuring plan and its successful implementation, he added.

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Stefan Menzel writes about the auto industry focusing on Volkswagen. To contact the author: [email protected]