Crisis Management

Needing Friends, VW Makes Enemies

ARCHIV - Das Volkswagen-Werk mit der Autostadt in Wolfsburg (Niedersachsen), aufgenommen am 05.10.2015. Foto: Julian Stratenschulte/dpa (zu dpa-Korr.: "Über 120 000 Jobs - die Bedeutung von Volkswagen für Niedersachsen" vom 12.10.2015) +++(c) dpa - Bildfunk+++
VW headquarters in Wolfsburg is operating much as it did before the Dieselgate crisis. But shareholders are beginning to demand change at the top.
  • Why it matters

    Why it matters

    The Dieselgate scandal will cost Volkswagen dearly but its top managers are further alienating shareholders and emboldening unions by considering rewarding its top managers with millions of euros in bonuses this month.

  • Facts

    Facts

    • Following a damaging public discussion in Germany, VW managers now look set to receive millions of euros in bonuses, although there are signs that they have agreed to trim the payouts by 30 percent.
    • Irate shareholders want the bonus payouts put on hold and are calling for a shake-up of the company’s supervisory board membership.
    • VW shareholders have seen the company’s stock plummet by 45 percent over the last year.
  • Audio

    Audio

  • Pdf

If the top managers at Volkswagen thought they could lay low and ride out the storm swirling around Europe’s largest automaker amid its Dieselgate global emissions scandal, they may be in for a surprise.

Increasingly, the automaker’s perceived defensiveness and tone-deaf crisis management appears to making problems even bigger for Germany’s largest listed company.

Not only are key shareholders beginning to call for the company’s supervisory board chairman, Hans Dieter Pötsch, to step down or remove himself from internal investigations into the fraud. There is increasing evidence that VW’s stonewalling mentality with the public and shareholders may be adding to its labor problems and legal bills ahead of a key month of decision-making.

A flashpoint for discontent is the automaker’s apparent decision to award its top managers — most of whom were in positions of responsibility during the years when VW falsified emissions on up to 11 million diesel autos — with multi-million-euro bonuses. Reportedly, top managers are prepared to accept only a 30 percent cut in their bonuses to be awarded later this month.

Several shareholders expressed dismay and criticized the payouts, which would be doled out even though VW faces billions of euros in fines, legal fees and recall costs, and is asking rank-and-file workers to suffer big cuts in their modest year-end performance payments.

 

VW Volkswagen's Executives and Their Pay 1-01

 

Management’s unyielding position on the executive bonuses appears to be helping the United Auto Workers, the U.S.’s biggest industry labor group, make headway in organizing its first chapter representing VW workers at its factory in Chattanooga, Tennessee.

Last December, a group of 160 workers at the plant voted to be represented by the U.A.W., which would be the first time the union would organize workers of a foreign automaker in the United States. Volkswagen challenged the vote, but on Wednesday, U.S. federal labor officials rejected its appeal, paving the way for the union to get a foothold at the VW plant.

Gary Casteel, a U.A.W. representative, called on Volkswagen to begin discussions with the union in Chattanooga to create the first union chapter “without delay.” Volkswagen, through a spokesperson who declined to be named, said the automaker was examining its options. The governor of Tennessee, Bill Haslam, has recently backed VW in the labor fight, criticizing the union for exploiting the crisis.

Southern states in the United States are generally anti-union, and use their lower cost of living and wages to attract industry and jobs from the north. VW plans to add 2,000 jobs at the Tennessee plant to build a new line of sports utility vehicles.

In Europe, VW’s handling of the crisis is coming under fire from shareholders and shareholder activists, who are increasingly frustrated at VW’s apparent decision to delay or minimize the repairs and recalls of vehicles in markets such as Germany, where the automaker has argued that its rigging software is technically legal under E.U. law.

As the scandal plays out, Volkswagen continues to lose ground in Europe, where more consumers are beginning to avoid the automaker and its 11 brands. The VW group’s combined share of the European auto market fell to 23.4 percent in the three months through March, down from 24.4 percent a year earlier, the European Automobile Manufacturers’ Association reported on Friday.

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