By on August 20, 2012

Should Volkswagen management miss its self-prescribed and audacious target of becoming the world’s largest automaker by 2018, as of today it would have someone else to blame than itself: Bernd Osterloh, chief of Volkswagen’s works council and therefore vice chairman of Volkswagen’s supervisory board, is against further acquisitions in the foreseeable future. “We are twelve brands now, and we need to stabilize the group first,” Osterloh told Germany’s Handelsblatt in an interview. Osterloh is especially against buying Proton (and with it Lotus): “As important as distribution and production in South-East Asia may be: Labor does not support an acquisition of Proton in Malaysia.”

Why Osterloh is against the Asian acquisition is anybody’s guess. South-East Asia has been identified as the next growth market, especially Volkswagen’s über-antagonist Toyota owns outsized chunks of market share in the tropical islands and peninsulas. Forget the pat answer that labor always opposes foreign expansion for fear of jobs at home. Osterloh is no dummy, and he knows that without a big international footprint, Volkswagen would share the fate of Opel and Fiat. And anyway: Proton already assembles Volkswagen cars, why not buy Proton while it is cheap and DRB Hicom wants it off its hands?

Osterloh does not keep us guessing for long. Further into the interview, he shows his hand. Osterloh is not against a more international Volkswagen, quite the opposite. “We want the supervisory board to become more international,” says Osterloh. A Swedish union representative of Scania should get a seat on the board, says Osterloh. Newly  subsumed MAN will send its works council chief Jürgen Dorn to the board. Osterloh also wants to have more women to liven up Volkswagen’s controlling committee. When he talks about stabilizing the group, he means stabilizing labor’s power base. With this done, Osterlohn will no longer oppose Volkswagen’s march towards world domination.

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6 Comments on “Volkswagen’s Labor Chief Against More Globalization...”

  • avatar
    Polar Bear

    This Proton VW saga has dragged on for a decade now.

    Malaysians think VW wants Proton for its market share. The British think VW wants Proton for Lotus. But Proton’s market share in Malaysia is 25% and falling despite all the help Proton is getting from 100% plus taxes on foreign cars. Meanwhile Proton’s export “success” consists of a 0.02% market share in Britain, with 640 cars sold last year, and a few thousand loss-making cars in other countries.

    Why would VW want the heavily indebted Lotus? Don’t they have enough small volume exotic brands?

    Some think VW wants the Proton plant. But VW can build its own plants and make them the VW way.

    Which leaves the South East Asia free trade zone. Half a billion customers in ten countries. VW wants a foothold inside the zone, and maybe a cheap local brand for recycled VW products from Europe.

    But the Malaysian government wanted Proton to be a real car company to make the country proud. The new Toyota or Hyundai. They would no like it if VW cleaned house and kept only the Proton name and the market access. So as desperately as Proton needs a foreign partner, the sale to VW has been put off again and again.

    • 0 avatar

      To save on product development costs I wonder if they would just take Skoda’s or SEAT’s and rebadge them as Protons. Otherwise you go the old GM way of having so many mainstream brands that you spend money on slightly differentiating (grill, lights etc) and we know how that worked out.

      • 0 avatar

        It’s all about where you sell them. If SEAT and Skoda only sell in Eastern Europe rebadging them isn’t a huge issue. GM was trying to sell the same car in 3 different dresses in the same market and they were relatively poorly built as well. I’m inclined to believe they would get independent sheet metal on existing VW platforms. That way the Malaysians can still ID it but use existing engineering resources. Design houses are far cheaper than a full blown independent manufacturer.

  • avatar

    Whoever buys into Proton will have to invest further to make the brand more competitive interconnected 21st Century market. Southeast Asia will grow as a market faster than Europe – but is the volume there?

    A rational for VW to buy into Proton would be to keep its plants out of the hands the Hyundai. It will be costly.

  • avatar
    Polar Bear

    There is much talk of how modern and great the Proton plant in Malaysia is, and how foreigners lust after it. But it is Malaysians who say this, not foreign car makers. How much of Skoda’s old stuff did Volkswagen keep?

    Malaysia’s market is 600.000 cars per year, Thailand 800.000 and Indonesia something similar. Those are the three biggest markets in the free trade zone. But if economic growth continues in the region we could talk millions more in a few years. They could use some more cars in Vietnam and Burma.

    The Malaysians government thought it could get VW technology and support without giving VW control of Proton. They wanted political control of the “national car maker” (most of the time selling old Mitsubishi models poorly remade) to continue. They don’t want to admit Proton is a 30-year old fiasco and subsidy pit with a GM-beating fall in domestic market share from 80% to 25%.

    Surprise, surprise, VW was not interested in being used as a passive supporter of a failed socialist car firm. Mitsubishi was kicked out once already for “insufficient technology transfer” to Proton.

  • avatar

    Osterloh brings up an important point. In Germany- labor gets to have a seat on the corporate governing board. But when a german company acquires a foreign company, the foreign laborers are unrepresented. Osterloh is right. Labor from every foreign plant should be represented just like the german workers are, on the corporate board.

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