VW boss again crosses hairs with the works council

Only a few months after the last major conflict with employee representatives at the Volkswagen works council, which ended in the loss of the post as head of the brand, VW CEO Herbert Diess has apparently found trouble again. Apparently, the development could even result in a “short-term replacement” for Diess.

+ + Kindly see our update below + +

According to a report in the German trade newspaper Handelsblatt, VW CEO Herbert Diess is looking for an early extension of his current contract with the German carmaking giant. The supervisory board or the executive committee will probably deal with the issue “in the next few days”.

The dispute escalated last week when the Herbert Diess accused the works council of blocking progress, particularly when it comes to what he considered necessary further restructuring steps at the German VW sites with high production costs.

Diess’ contract is not supposed to run out until April 2023, but from the 62-year-old’s point of view, it would be best to decide on an extension now. “He now needs confirmation that the Supervisory Board supports his course,” insiders explained. A company spokesperson declined to give Handelsblatt a comment.

The works council probably won’t want to agree to the plan. The employees as well as the families Porsche/Piech and the state of Lower Saxony are the largest shareholders in the company and were surprised by the initiative. None of these parties is currently interested in an escalation of the conflict. According to the Handelsblatt, however, it is conceivable that Diess and the supervisory board would “no longer find a common line” and instead of a contract extension, would threaten a short-term replacement.

In early summer, the ongoing conflict between the VW boss and the works council escalated. This saw itself discredited by IG-Metall representatives in the public and subsequently accused the supervisory board of breaking the law, but without providing any evidence, confidential information that was only accessible to a small circle of people was supposed to be passed on to the media. The leak apparently saw this on the employee side.

Since the unproven accusation of breaking the law had shaken the supervisory board’s confidence in Diess, a separation was even in the air at the time and was even concretely prepared. In the end, the supervisory body decided on a lighter option and Diess was stripped of the VW brand (and transferred to Ralf Brandstätter) but was allowed to remain as head of the group.

Last week, however, the relationship with employee representatives at the works council again got worse. On LinkedIn, Diess wrote: “When I took office in Wolfsburg, I firmly resolved to change the VW system.” But he had not succeeded in doing so, especially at the company headquarters.

Last Friday, Diess was not even invited to a ceremony to celebrate the 75th anniversary of the works council at Volkswagen. In his welcoming address, however, he warned that increases in efficiency were necessary and should not be underestimated for the continued existence of companies. “We still have some catching up to do here at Volkswagen,” Diess said.

Diess now wants the Board of Management to confirm this goal of changing what is being called the “Wolfsburg Fortress”. This is not only about Diess’ own personnel but also about other appointments to the Board of Management. Chief Financial Officer Frank Witter wants to retire in 2021. Diess, a VW redeveloper, wants to bring his confidant Arno Antlitz to Wolfsburg, who currently heads the finance department at Audi. Since there were repeated conflicts with the works council during his time as head of finance at the VW brand, works council chairman Bernd Osterloh is most likely to reject Antlitz “outright”, according to the Handelsblatt newspaper.

Another possible change at board level concerns the Volkswagen brand: As Business Insider claims to have learned from company circles, from the end of 2021, when almost only electric cars will be produced in Zwickau and ID.4 has celebrated its market entry, the position of Chief Electrical Officer held by Thomas Ulbrich is to be significantly deprived of his power. The tasks and the linked structures are then to be reintegrated into the “overall organisation of production” at VW. By then, electric cars should be “mainstream” at Volkswagen and no longer require a separate organisation.

Thomas Ulbrich, member of the e-Mobility Board of Management, would expect new tasks in a year at the latest. According to the report, it is possible that Ulbrich –who was previously Vice President at SAIC-VW for several years – will go to China. The joint venture with JAC is to participate in the development of the MEB small car of Volkswagen.

Update 02 December 2020: While VW Group CEO Herbert Diess’ requested early contract renewal is still not clarified, another top executive Volkswagen is making a big change: eMobility board member Thomas Ulbrich is leaving the Group next year. In other updates, Volkswagen is changing its position on motorsports.

The reasons for eMobility boss Ulbrich’s departure are being hotly discussed in the German media with different theses. We take a further look into these with a special report.

handelsblatt.com, businessinsider.de (both in German), handelsblatt.com, automobilwoche.de (both in German, update Diess)