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Cavallo, Diess: Showdown in Hall 11
Photo: Swen gatekeeper;
Carsten Koall / picture alliance / dpa
Showdown in Wolfsburg: Volkswagen boss Herbert Diess and works council chief Daniela Cavallo meet today (November 4th) at the VW staff meeting at the Group's headquarters. Diess made a lot of steam in the run-up: with the idea of cutting up to 30,000 jobs - that would be almost every fourth job at VW in Germany - he made the VW employees extremely excited. The main plant in Wolfsburg must be "more productive" demanded Diess - and instigated an open conflict with a powerful opponent. In none of the large German corporations do the works council and employee representatives have as much influence as they do at Volkswagen. It is also the first big appearance of the new works council boss Cavallo, who now has to show her strength in front of her own employees. What to expect from the showdown.
Why does Diess create an alarm mood at VW?
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Hard serve: Herbert Diess
Photo: Carsten Koall / dpa
The VW boss fears that he will be thwarted after a furious first half of the year. After a profit of 11.4 billion euros from January to June, VW was well on the way to achieving the highest annual profit in the company's history - until the chip crisis destroyed this prestigious record. The volume brands VW, Skoda, Seat and VW Nutzfahrzeuge in particular suffer from the lack of chips and the associated slump in sales. Taken together, the mass models posted a loss in the third quarter. At the same time, the mass manufacturers Stellantis, Ford and GM, which were also affected by the chip crisis, continue to work profitably: An alarm signal for Diess that Volkswagen produces too expensive in comparison and that the German locations such as the main plant in Wolfsburg are not productive enough.
His antidote: lower costs, cut jobs.
The VW boss was probably aware that the works council had to take the 30,000 jobs brought into play by Diess as a challenge.
However, the Volkswagen boss does not like the fact that the future pact agreed with the works council has not yet been fully implemented.
The group is still away from the agreement to cut 14,000 jobs by 2025.
There is no avoiding cost reductions for Diess - regardless of the duration of the chip crisis.
What role does Tesla play in this?
For years, Tesla has been faster than the German automaker expected in all important projects. Whether it's the jump from a niche supplier to a mass manufacturer (Model 3), the development of software, the construction of an attractive charging station network, the possibility of automatic updates or the construction of new factories: Tesla VW, Daimler, BMW and Co surprised with its speed. "We need more speed in the development of new vehicles and in decision-making," demanded Diess shortly before the staff meeting and referred explicitly to the Tesla factory in neighboring Grünheide.
At the same time, Tesla is taking on the role of pacemaker, which is useful for Diess: It is no coincidence that Diess recently switched on Elon Musk as a surprise guest at a VW management meeting and that months ago he did a few laps in ID.3 together with the Tesla boss.
The publicly demonstrated proximity shows: Elon Musk should bring Diess' managers in line and swear them to the new course (more speed, more electric cars, higher productivity).
What has to change at Volkswagen?
The VW boss is interested in acceleration. Both in the development of the software for the coming generation of cars and in the work processes in the German plants. When it comes to software, VW is behind its own schedule. VW will also clearly miss its goal of selling around 600,000 electric cars (ID.3 and ID.4) this year.
At the same time, the profits and profit margins of the other German car manufacturers have risen in the past few months: Since it is mainly high-priced cars that are sold and customers have to wait months for new cars, the manufacturers do not engage in discount battles.
The current high profits threaten to mask the structural problems and could lead to dangerous complacency: This would look pretty bad.
That is one of the reasons why he bumps the horn extra loudly, even if he is snubbed the new head of the works council.
Does Diess risk breaking with the works council and his own job?
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Strikes back: Works council chief Daniela Cavallo
Photo: Swen Pförtner / dpa
Those who distribute loudly have to live with loud echoes. It is no coincidence that the day before the employee meeting in Wolfsburg, the future of the VW boss is an issue again. The dispute over the future of Diess was "an issue in the mediation committee," it said on Wednesday, citing insiders. The message is clear: even after his contract extension, Diess is not considered sacrosanct. He can still count on the support of the Porsche and Piech families. One of the laws at VW is also: Anyone who persistently turns the powerful works council against them has no future in the group. As VW boss, Diess must succeed in getting companies and employees to agree to a common line.
As a result, works council boss Cavallo also flexed his muscles before the staff meeting: she whistled the VW boss back from a planned trip to the USA to Wolfsburg and made it clear a few days before the showdown that she expected top management to strengthen the main plant in Wolfsburg, which is currently underutilized - best by producing the "Trinity" electric model.
As the successor to the edgy and conflict-prone works council boss Bernd Osterloh, it is also personally important for Cavallo, as the new works council boss, to strike back loudly and with a sense of power.
The election campaign for the next works council election will begin in spring 2022.
Will there be a big bang during the meeting?
Unlikely. Cavallo and Diess will certainly not give each other anything for their first big direct exchange of blows in front of the VW employees. But both know that despite loud and sharp tones, they will have to find a common line in the coming months. This is indicated by the fact that Volkswagen has postponed the decisions it had previously planned for November 12 for medium-term investment planning to December 9. This gives everyone involved time to negotiate future investments at the Wolfsburg parent plant. And a possible new production hall for the "Trinity" project would be an investment that should meet with applause from the unsettled Wolfsburg employees.
The fact that the culture war at Volkswagen on Thursday may not escalate verbally, but initially in terms of content will probably not escalate further, also has to do with the corona pandemic.
Only 7,000 VW employees will be present in Hall 11 in Wolfsburg on Thursday, the rest of them will follow the event via the intranet.
The usual question and answer session and discussion after the presentations by Diess and Cavallo is also canceled, as it is officially not a works meeting, but merely an "information event for the workforce".
Therefore, the eagerly awaited duel Diess vs Cavallo will not turn into an all-around competition: After the loud noises of the past week, this should be right for the VW boss.
