VW Works Council Forces Out Consultants Amid Headcount Reduction Fears

Cameron Aubernon
by Cameron Aubernon

Volkswagen AG execs will have to go back to the drawing board to determine where to cut costs after its works council demanded outside consultants be shown the door.

Reuters reports last month, CEO Martin Winterkorn informed his employees that he was seeking €5 billion ($6.7 billion USD) in efficiency gains by 2017 so as to close the profit gap between his company and its rival automakers. In turn, VW brought aboard consultant group McKinsey to help determine where to find the needed gains. But the pricey consultants were a point of contention with VW’s labor representatives.

The concerns over McKinsey’s presence focused upon fears of potential layoffs at factories in Kassal and Wolfsburg, Germany, where a total of over 65,000 assemble components, transmissions and vehicles. Labor leaders suggested the company focus on cutting both R&D spending and its trimming its bloated model lineup rather than reduce headcount.

Cameron Aubernon
Cameron Aubernon

Seattle-based writer, blogger, and photographer for many a publication. Born in Louisville. Raised in Kansas. Where I lay my head is home.

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  • Jpolicke Jpolicke on Aug 12, 2014

    VW is guilty of spending way too much on R&D chasing the 100km/ltr white whale. The XL1 is an extreme technical exercise with zero commercial potential. NO ONE is going to pay $146,000 for a car with 0-60 times of 11.9 seconds. I'd rather have 2 Teslas. They would have been on to something had they gone with aluminum & magnesium rather than carbon fiber, gave it just a little more power and settled for "only" an honest 100MPG combined.

  • Wmba Wmba on Aug 12, 2014

    You can hardly blame the Works Council for the €70 billion the VW management braintrust has spent on MQB and new models. VW has about 103 factories and about a year ago started faltering at installing the massive equipment required for implementing MQB in all their assembly plants due simply to the cost. This has been covered in the press, people. So, to justify what any fool knew was an over-reach of its resources, management hired consultants to paper over its mistakes with the usual whitewash. No surprise the Works Council is upset that the monumental waste of resources may impact them, as the dual brainiacs of Winterkorn and everyone's favorite 80 year-old gigolo, Ferdy "I know I'm a genius" Piech try to skip blame and impose "cost-savings". The usual chorus of Fox News knee jerk reactionaries and valet service providers here immediately blame the Works Council, as usual. No imagination, just frothing at the mouth. There are no bad unions, just bad management. These days, management hires PR apologists to deflect all blame from them, by shifting it to others. Consultants are just PR minions with MBAs for hire to make it appear legit. It ain't, and management has had its nuts kicked.

  • Bartelbe Bartelbe on Aug 13, 2014

    Getting rid the consultants was the right call, they are an expensive waste of time and money used by incompetent management. I know a consultant, he started straight after leaving Uni. Total management experience zero, work experience virtually zero. No problem, he was given years of training before they let him loose on the clients. Nope, he had two weeks worth, to be blunt you could get exactly the same information he has from the idiots guide to management, that were he gets his information from. As for cutting R&D spending, good news for Germanys competitors if they do that.

  • Zykotec Zykotec on Aug 13, 2014

    No matter how profitable their cars may be, any large coorporation today also have another customer group to take care of. Our stock holders 'demand' a 10% increase in stock value for instance. And our management, instead of hoping for intelligent, reasonable or responsible people to buy our stocks instead, are more than willing to try to oblige. Until everything is sold off for profit, and the factory is not capable of upholding any sort of production... Offcourse, not keeping them happy will reduce the stock price, which sadly is the 'actual value' of a factory today. I'm not sure how this would work for VW or Ford which are largely still family owned, but I guess they still have to keep their share holders happy to keep the price up.