Volkswagen's Labor Chief Against More Globalization
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.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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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.
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.