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Betting on Bernhard's Next Move

Posted by: Gail Edmondson on December 5, 2006

The endgame is near. Volkswagen’s board meets Dec. 6 and will approve a series of top management appointments in the wake of CEO Bernd Pischetsrieder’s departure Dec. 31. Will Bernhard be among them or will he be on his way out the door? VW’s new CEO Martin Winterkorn is bringing a cadre of loyal Audi managers with him to Volkswagen. The only likely posts left for Bernhard are either head of production or head of premium car unit Audi.
Insiders at VW say an angry Bernhard intends to leave and is merely negotiating the terms of his departure — including the cancellation of a non-compete clause which would prevent him from taking a position with DaimlerChrysler, most likely running Chrysler. Although VW’s board of supervisors wants him to stay, it’s hard to imagine the ambitious and outspoken Bernhard having much room to maneuver under the powerful trio at the top of VW: Autocratic Chairman Ferdinand Piech, Porsche Chief executive and VW board member Wendelin Wiedeking — VW’s largest shareholder; and finally, ex-Audi chief Winterkorn, a close associate of Piech.
If Bernhard goes, the loser is Volkwagen. Bernhard is hardly finished restructuring Euruope’s largest automaker. VW is still saddled with the highest labor costs in the industry and loses money on every car built in Germany. No question, Bernhard’s skills could be quickly re-deployed at Chrysler, which has seen its turnaround start to unravel this year. Bernhard was DaimlerChrysler CEO Dieter Zetsche’s right-hand man at Chrysler from 2000-2004. Together the two reversed Chrysler’s gushing losses and launched a couple of hit models like the 300 sedan. In early 2004 Bernhard was named as the future chief of Mercedes, but he fell out with former CEO Juergen Schrempp and infuriated powerful German labor leaders on the supervisory board at Daimler by insisting that the venerable German luxury brand was in dire need of restructuring. He was edged out, but he was right. In 2005 after Schrempp was forced out, Mercedes’ new CEO Dieter Zetsche cut 8000 production jobs at Mercedes and another 6,000 in administration.
Zetsche, in dire need of strong management to steer Chrysler, would be lucky to snare Bernhard. But first the brash turnaround ace has to mend a few fences with labor leaders on Daimler’s board. Last week Daimler labor boss Erich Klemm icily ruled out Bernhard’s return, saying “that chapter is closed.” Klemm wasn’t available to comment today. But for the good of the company, perhaps Klemm will relent and allow Bernhard a kind of constructive exile in Auburn Hills.

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