Business World

Tuesday 14 August 2018

Radical Volkswagen shake-up leaves unions reeling

Herbert Diess
Herbert Diess

Irene Preisinger

Powerful labour unions at Volkswagen are concerned by a sudden rush by the German carmaker's board to approve sweeping changes, sources said, while 'Handelsblatt' newspaper reported that its finance chief could step down.

As part of what could be the biggest shake-up at Volkswagen in a decade, CEO Matthias Mueller is due to be replaced by Herbert Diess, head of VW's core car brand, who has repeatedly clashed with unions over cost cuts. Volkswagen announced the CEO change on Tuesday in a short and cryptic statement, abruptly ending the reign of Mueller who took over at VW a week after it was plunged into its biggest-ever corporate scandal.

Other changes before the board include a public stock- market listing of VW's truck and bus division, a management board seat for a labour representative and a reorganisation of its 12 brands into four categories, sources said.

Volkswagen's efforts to reform have often been stifled by powerful unions who command half of the seats on the board of directors, and the German state of Lower Saxony, which controls a 20pc voting stake.

"Nobody knew anything," a source at one of VW's brands told Reuters. "What's going on there is plain folly."

"The way in which changes of such a magnitude were communicated internally is more than questionable," a source close to VW's supervisory board said.

Sources close to VW said the controlling Porsche-Piech families and Lower Saxony had decided they could not afford to wait because of the risk of the changes being leaked.

They brought a board meeting forward from Friday afternoon for the same reason, the sources said. (Reuters)

Irish Independent

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