Porsche Trumps VW's Union

Posted by: Gail Edmondson on October 24, 2007

wiedeking two.jpg

It’s dangerous betting against Porsche Chief Executive Wendelin Wiedeking. A master strategist, Wiedeking is on a 15-year winning streak. He’s taken Porsche from near bankruptcy to the top of the charts, with the best profit margins in the auto industry.

So when Wiedeking announced plans for Porsche to take control of Volkswagen, it was clear he would face off sooner or later with VW’s union leaders, who have long held sway over VW’s management back in Wolfsburg. German law grants labor half the seats on the board of supervisors at large companies. But VW’s labor bosses were particularly powerful because the state has been the automaker’s controlling shareholder for the past 47 years — and elected officials coddled labor.

That’s history now. Yesterday, the European Court of Justice struck down the German law that gave the state an upper hand at VW, by limiting voting rights of any shareholder to 20%. The court ruling cleared the way for Porsche, which has a 31 percent stake in VW, to take control.

So does Wiedeking get saddled with VW’s cantankerous unions? No way. In prepration for a takeover, Wiedeking announced he would switch Porsche to a European holding company. Under EU law, Volkswagen labor represenatives will get only 3 seats on the future board of Porsche, compared with the 10 they now hold. Porsche workers would also get three seats, for a total of six.

Outraged, Volkswagen’s labor leaders sought an injunction against Wiedeking to stop the creation of a Porsche European holding. But a judge ruled against them Oct. 24.

Next move? Wiedeking has plans for big efficiency gains at VW, and is benchmarking Europe’s biggest automaker against Toyota. It may be a long path, but Wiedeking has only just rolled up his sleeves. And so far, it’s Wiedeking 1, unions 0.

Reader Comments

Nighthawk

October 26, 2007 6:46 AM

This is one of the best things that could happen for Volkswagen AG.

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