#WorksCouncil

Volkswagen CEO Herbert Diess has been facing off with the company’s German workforce for weeks over the changing nature of the business. VW vowed to transition itself toward an all-electric lineup following the 2015 diesel emissions scandal. But the necessary steps to get there haven’t been universally appreciated.

The general assumption has always been that electric vehicles would result in massive layoffs across the industry by nature of their needing fewer parts than internal combustion vehicles. But Volkswagen seems worried that it’s falling behind smaller rivals and needs to take decisive action to make sure it’s not outdone by firms operating in the United States and China. The proposed solution is an industrial overhaul designed to fast-track VW’s electrification goals. Unfortunately, German labor unions are convinced that this plan would incorporate massive layoffs and have become disinclined to offer their support. The issue worsened in September when Diess told the supervisory board that a slower-than-desired transition to EVs could result in 30,000 fewer jobs.

Reports have come in from Germany that Mercedes-Benz has decided to reduce its management staff by around 10 percent globally. On Friday, German newspaper Suddeutsche Zeitung wrote that Daimler CEO Ola Källenius wishes to delete around 1,100 management posts while freezing wages for all 300,000 German employees — citing internal documents from the automaker’s works council.

Handelsblatt also said it intercepted a copy of the letter, with both outlets claiming Daimler would elaborate further on the plan this Thursday. While Mercedes said it couldn’t comment on the matter, its restructuring push was no secret, even before Källenius took over as chairman in May.

According to a report by Bild am Sonntag (via Reuters), Volkswagen’s third largest shareholder, the Qatar Investment Authority (QIA), wants trade unions to have less influence in what happens at the automaker amid Volkswagen’s ongoing emissions scandal.

QIA, which owns 17 percent of Volkswagen, is said to use a meeting scheduled today with automaker CEO Matthias Müller to “demand a scaling back of the role of the works council,” reported Reuters.

Volkswagen representatives denied the report, stating, “Co-determination (joint decision-making by corporate and labor representatives) and the (role of the) works council were not on the agenda of the talks.”

The UAW’s new “voluntary” union local at VW’s Tennesse assembly plant will be aiming for the first Works Council at a North American plant.

More drama in the ongoing Volkswagen unionization fight in Chattanooga: Volkswagen USA is not keen on the union, while Volkswagen’s management board is divided on the matter. One thing that seems certain is the prospect of a secret ballot vote on the union, according to Reuters.

This weekend was the end-of-summer graduation at Auburn, and like all such events, it brought an avalanche of rental cars to our Loveliest Village on the Plains™. Amidst the ubiquitous Chryslerbishis and engineering-excellence-cum-fleet-staple Camrys, I spotted a couple of newish Jettas and Passats wandering about town, crooked rental bar stickers applied with obvious indifference. I saw one particular rental Jetta sitting in the parking lot not far from the bookstore when I went to pick up some cut-price tomes. Coated in dust and wearing those ugly DUI-style New York plates, it was a forlorn sight. I couldn’t help but think of it as a reminder that the road to hell can be paved with tax breaks as often as it’s paved with good intentions; at least that’s the case if you happen to be governor of Tennessee.

As Volkswagen gears up for a decision on expanding their Chattanooga factory, a member of Volkswagen’s supervisory board told the Handlesblatt that any new product would be contingent on VW adopting a works council ( explanation by our own veteran of Volkswagen BS here) for the plant.

GM has a huge problem in Bochum – or an unexpected opportunity. Workers at Opel’s Bochum plant yesterday refused a restructuring plan that would guarantee auto production in Bochum through 2016, and that would keep the plant making components after that. GM answered on the same day: ”Production of the Zafira Tourer and the waiver of enforced redundancy will end after 2014.” This would open the door to closing the doors in Bochum.

It also could become extremely costly for GM.

The head of Germany’s metal worker union IG Metall, Berthold Huber, urged workers at Volkswagen’s Chattanooga plant to join the UAW. In a letter distributed to Chattanooga workers, obtained by Reuters, Huber says:

News of Volkswagen being open to establishing a works counci l at its plant in Chattanooga are widely interpreted as the UAW getting a long-sought nose under the southern tent. It could also be a shrewd move to block the union.

After a round of psychological warfare with targeted leaks, GM seems to be ready to attack the overcapacity at lossmaking Opel in earnest – eventually. The German government reportedly has been informed that Opel wants to close Bochum. Jobs will be exported to low cost countries such as Poland, Russia, China, India, Mexico and Brazil. Cars will be imported even from China.

From his dream of a UAW-represented VW plant in Tennessee ( ha!) to his desire for a seat on the boards of the Detroit automakers ( double ha!), UAW President Bob King has a way of idealizing the German unions. And no wonder: while the UAW spent decades fostering a radical sense of entitlement, German works councils entwined themselves with their respective employers, earning places of power among the world’s largest automakers. But unions are a delicate balancing act in every country and culture, and even Germany’s unions, widely hailed as the example for the industry, can run into trouble.

Last time it was Volkswagen’s powerhouse works council, which erupted in a scandal over VW-funded sex tourism (with free Viagra and shopping trips for the wives!) back in 2005. With Opel’s union boss, Klaus Franz, becoming caught up in his own (slightly less lurid) scandal, GM’s acknowledgment that more cuts could be coming for Opel could prove just as explosive for the German works council model.

Sex and money are known as the world’s biggest motivators. Volkswagen used sex to make its shop stewards cooperative. This ended in a huge scandal. Opel is using money instead. “The system is the same as formerly at Volkswagen – only without sex,” writes Germany’s Frankfurter Allgemeine Zeitung in a long article about “illegal bonus payments” to members of Opel’s works council.