Economy

Volkswagen: Power struggle between the VW alpha animals Diess and Osterloh

Herbert Diess has arrived where he always wanted to go – at the top. For two years, the lean manager with a strong instinct for power has been the chief executive officer of Volkswagen, the country’s industrial icon and the world’s largest automobile manufacturer.

Diess would like to occupy an important place in VW’s long history, at eye level with automotive alphates like Ferdinand Piech. As the man who saves the company and successfully leads it into the age of electromobility. As VW boss who writes history, as glorious as possible.

The present that Diess is currently struggling with is less glamorous. There is the software chaos surrounding the ID.3, the first Volkswagen vehicle designed purely as an electric car and an important beacon of hope for the group. There is the embarrassing recall of the Golf 8 bread and butter cart due to production errors. Then a racist promotional video appears. And all of this happens in the middle of the corona crisis, which is hitting the automaker with full force anyway. VW boss Diess can expect uncomfortable questions when the supervisory board meets on Thursday.

The letter from the works council was a general settlement with the executive floor

The last meeting of the control panel will not forget this quickly. An explosive letter landed at Diess two days before the meeting in late February. The content was a general statement of the general works council. In the letter, the powerful labor leader Bernd Osterloh, along with all the works council heads of the German plants, listed what went wrong at Volkswagen.

The VW employee representatives traditionally have more influence on the company than anywhere else, see themselves as a kind of co-manager: But what Diess had to read there was an unusual process even by Wolfsburg standards. According to information from NewsABC.net, the trade unionists directly blamed the top management of Diess for the many failures – and that two days before the important Supervisory Board meeting. A copy of the letter also went to the Chairman of the Supervisory Board, Hans Dieter Pötsch, Porsche CEO Oliver Blume, and the Management Board members Frank Witter (Finance) and Gunnar Kilian (Human Resources).

In the letter, the employee representatives were annoyed by the situation at Volkswagen, and also criticized the rude leadership style of Diess. A number of top managers had previously gone to the works council and complained that Diess had allegedly treated them badly.

The trade unionists criticized two major construction sites in particular: the Golf 8 and the ID.3. With both Mammut projects, which are immensely important for the group, there is a huge shortage. The Golf is traditionally the model with the highest sales, the ID.3 is intended to successfully bring Volkswagen into the era of e-mobility. In both cases, the works council denounced unclear responsibilities and lack of responsibilities, and asked Diess to finally take action. Otherwise, the entire group would face major difficulties. Today, the works council sees itself confirmed: the criticisms from the letter from the end of February are currently – alongside the corona crisis – the biggest problem areas.

At the beginning of March, VW chief Diess met with the works council in Zwickau

When the supervisory board met on February 28, the management board had one main concern: Does Osterloh make the maneuver criticism of Diess a topic in the control committee, in which, in addition to the employee representatives, members of the owner families Porsche and Piech and Lower Saxony’s prime minister Stephan Weil sit? And will the explosive content of the letter become known, will there possibly be a public leadership debate? None of this happened because Osterloh did not launch the letter with the Diess criticism. And because his opponent Diess reacted surprisingly.

Because instead of responding angrily to the Osterloh attack, Diess held out his hand to the head of the works council. True to the motto: let’s solve the problems together! In early March, Diess met Osterloh and the other top trade unionists in Zwickau. In the conversation, he admitted mistakes and promised to tackle the problems in the group correctly now. As a result, joint working groups were set up. From the circles of the employee representatives it is said that one is now on the right track, even if a number of problems have not yet been solved. Diess also praised the efforts of the works councils internally.

The relationship between the two alpha animals determines the fate of more than 600,000 employees

All of this is astonishing in view of the years of conflict between Osterloh and Diess. Diess switched from BMW to the top of the core brand VW in summer 2015. The power of the works council in Wolfsburg was a thorn in his side from the start. He couldn’t understand why trade unionists should have a say in corporate decisions and top personalities. From then on he hardly missed an opportunity to prick the workers’ representatives. He wanted to reduce the influence of Osterloh & Co. to a minimum. But Osterloh opposed this, publicly counted Diess and nicknamed him “Uncle Herbert” because of his preference for checkered jackets.

The duel between the two alpha animals picked up speed. In the meantime, they closed a kind of ceasefire when Diess replaced the then CEO Matthias Müller in April 2018 – with the help of Osterloh. Then the conflict broke out again. According to the letter from the general works council in February, there was initially an alarm mood, then they tried to remain closed. To date, the two do not dare to cross the path. But they know that their relationship decides the fate of more than 600,000 employees at the car giant. Volkswagen really can’t afford a power struggle between Diess and Osterloh at the moment.

CEO Diess has now understood that he has to come to terms with Osterloh and the VW system. Also because the trade unionists make up half of the 20 members on the Supervisory Board and traditionally vote with the two representatives of the State of Lower Saxony. The power of Osterloh is based on this majority, and even highly paid board members are trembling. This currently has the full backing of Osterloh. But security looks different. Because the mega projects Golf 8 and ID.3, it is said, decide the fate of Herbert Diess.

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